The views expressed in these papers are those of the authors SW P-1 96 and do not necessarily reflect those of the Wlorld Bank. Public Disclosure Authorized

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP1INT

Working Paper No. 196

Investment in ; National Strategy Options for Developing Countries

Public Disclosure Authorized John Simmons

Mark Blaug Arnold Harberger Samuel Bowles Dean Jamison Martin Carnoy Ernesto Schiefelbein Remi Clignet Marcelo Selowsky Ronald Dore Michael Todaro Edgar Edwards Public Disclosure Authorized

The papers review the main feature of educational systems in developing countries and the investment issues. Options for national educational strategies are proposed. They were discussed at a workshop jointly sponsored by the Development Department and the Education Department of the IBRD held in Washington in October, 1973. Reports of rapporteurs suggest the nature of the discussion.

Population and Human Resources Division Education Department Development Economics Department Central Projects Staff Development Policy Staff Public Disclosure Authorized February 1975

TABLE OF CONTENTS

Page

Contributors iii

Summary

Nutrition and Other Early Factors

Marcelo Selowsky, Pre-School Age Investment in Human 4 Capital

Rapporteur's Comments 21

Migration and Fertility

Michael P.Todaro, Education, Migration and Fertility 21

Rapporteur's Comments 31

Internal Efficiency

Dean Jamiaon, Radio and Television for Education in Developing Countries 7

Ronald Dore, Deschool? Try Using Schools for Education 50 First: The Educational Impasse in the Developing World

Ernesto Schiefelbein, The Impact of the Jencks Type 70 Research on Developing Countries

Rapporteur's Comments 80

Employment

Mark Blaug, Education and 82

Martin Carnoy, Schooling and Unemployment 90

Remi Clignet, Education and Employment in Developing Nations: Fifteen Years Later 101

Rapporteur's Comments 109

Income Distribution and Social Mobility

Samuel Bowles, Education, Class Conflict and Uneven Development 113 Page

Intersectoral Allocation

Edgar O.Edwards, Investment in Education in Developing 127 Nations: Conflict Among Social, Economic and Political Signals

Rapporteur's Comments 144

Alternative National Strategies

John Simmons, Education, Poverty and Development 147

This paper has been issued as IBRD Working Paper 188 It is included here because in its original version entitled Investment in Education: National Strategy Options it formed the concluding paper in this series.

- ii - LIST OF CONTRIBUTORS

Mark Blaug, Professor of Economics of Education and Head of Research Unit in the Economics of Education at the of London Institute of Education.

Samuel Bowles, Associate Professor, Department of Economics, Harvard University; and Research Associate, Center for International Affairs and Center for Educational Policy Research, Harvard University.

Martin Carnoy, Associate Professor of Education and Economics, Stanford University.

Remi Clignet, Professor, Department of Sociology, Northwestern University.

Ronald Dore, Professor, Institute of Development Studies, University of Sussex.

Edgar 0. Edwards, Economic Advisor, Asia and Pacific Program, The Ford Foundation.

Arnold Harberger, Visiting Professor, Woodrow Wilson School, Princeton University; and Professor of Economics, .

Dean Jamison, Research Economist and Chairman, Economics and Education Planning Group, Educational Testing Service.

Ernesto Schiefelbein, Visiting Professor of Education, Graduate School of Education, Harvard University; and Professor of Education, Catholic University, Santiago, .

Marcelo Selowsky, Economist, Development Research Center, .

John Simmons, Economist, Development Economics Department, World Bank.

Michael Todaro, Associate Director, Social Sciences, The Rockefeller Foundation.

Rapporteurs: World Bank Staff

Rachel Brandenberg Ricardo Moran Jean Pierre Jallade Marcelo Selowsky E. Philip Jones

- l -

SUNMKARY

The expansion of investment in formal education has been phenomenal in the last two decades. And only in a few developing countries are there signs that the rate of expansion may be slowing down. In country after country, education has been the only sector to meet or exceed the planned investment targets. Demand has been fueled by critical manpower needs, parental pressures for more years of schooling for their children and thus better job opportunities, and the conviction that education is a human right for all citizens. Because of the relatively low capital costs, including foreign exchange, of supplying new school places, at least compared to creating new jobs, the supply rapidly expanded.

The successful expansion of formal education, however, has created a new generation of social and economic problems. Education has become the largest item in many countries' current budgets: as a result, unless present trends are damped, an increasing number of nations face serious financial problems. Foreign exchange costs become serious when the expansion of secondary and higher education forces the maintenance of ever larger numbers of expatriate teachers and imported school equipment and supplies. Yet reducing the rate of expansion creates serious political problems. Middle-class parents are the most outspoken when reductions are threatened, since their children, expecting a place at the secondary or university level, might not be admitted. And these parents are usually the main source of political support of the govern- ments. Teachers, usually the largest single group of wage earners in a poor country, are also a politically potent element when changes in the education system are proposed.

Finally, recent research suggests that schooling has not been as effective in promoting cognitive achievement, as measured by school tests, as we had expected. Research results for Eirope and the in the 1960's have recently been supported by results for a limited number of developing countries.l/ Non-school factors like parental behavior, nutrition, and peer group experience are more important than expected in predicting achievement scores. Traditional school inputs like class size, length of teacher training and expenditure per pupil, are usually insignificant in determining differences in student scores. This research has important implications for future investment decisions.

Policy makers in countries that are considering increased efforts at reducing poverty through employment, income redistribution and welfare measures, are asking what is the contribution of education to individual and social welfare? Should resources now used for formal education be shifted to the other programs where they might have a higher marginal social product? Can allocation within the sector be made more efficient and effective? The papers of this two day workshop help to clarify these and related educational policv questions.

1/ John Simmons, "The Effectiveness o4 Schooling in Promoting Learning: A Review of the Research," (Sovtbowming IB4RD wo#41ng papq?. - 2 -

While individuals in each country will have to undertake a thorough evaluation of their educational objectives and resources and promote broad consultation in preparing their strategy, three major areas for action appear significant.

A. To damp the social demand:

(1) Ensure that artificial wage differentials for different occupations be rapidly narrowed. International trade in human capital also requires better controls to limit the export of highly-skilled manpower from poor countries. Artificial distortions in factor and product prices should be reduced to encourage use of labor intensive technologies;

(2) Ensure that certificates of schooling are no longer re- quired for most occupations. When employers become more skill specific in their needs, a flexible education structure will emerge to meet the better specified demand;

(3) Require that middle- and upper-income students share a greater burden of the costs of their secondary and higher education. Explore the advantages of establishing an educational bank to transfer to the consumer the responsi- bility for both repayment and purchase of educational services. Time spent in public service would count as a form repayment, and should be encouraged. Localize school taxation and expenditure so that the costs and benefits are better understood locally. Low-income groups should have sufficient subsidies to permit them to overcome the private costs of schooling; and

(4) In countries with an over supply of school leavers, intro- duce a system of quotas whereby the absolute number of students in the formal system at the secondary and higher levels is restricted to the rate of population increase or even less. It can be combined with existing exam systems. In some countries, rationing is already taking place on a basis of geographic location, which serves as a proxy for parental social status. It should be made explicit and fair. Finally, this should encourage the share of the national budgets and GNP going for schooling to fall for many countries and level off for others. Mis- allocation will be reduced.

B. Increasing the economic relevance of learning alternatives is more difficult than it may seem. Some countries like Cuba and China have made more sustained and comprehensive efforts than others. Rich countries have also made considerable efforts to improve learning among low-income groups. Some countries are considering nonformal education as a panacea for the illnesses supposedly caused by formal education, but we know virtually nothing about either how effective of how costly this is. To improve the opportunity for the development of alternative learning systems: - 3 -

(1) Eliminate the monopoly power of governments in the field of organized learning. If creative and economic alternatives to formal schooling are to develop, then incentives should be established to encourage more productive learning tech- nologies. Experience is increasing with voucher systems where the parents pay the teachers. Apprentice systems may be the most efficient for other skills;

(2) Increase the effectiveness with which the basic cognitive skills are learned, and thus reduce the phenomenon of primary schools producing semiliterates; and

(3) Explore the opportunities of informal education, using adults and more advanced students to teach.

C. Compensate for the inequality effects of most of the existing formal school systems:

(1) Establish quotas on the basis of social class, geographic location or school, to assure that the proportion of the low income students at secondary and higher levels is equal to or higher than their representation in the population;

(2) Consider the use of automatic promotion from one grade to the next;

(3) De-emphasize the role of examinations for promotion. Eliminate the social class bias to present examinations. Add the testing for wider range of behavioral skills; and

(4) Develop mechanisms to encourage students who dropped out to re-enter the formal system at an older age.

These suggestions are a best guess as to possible guidelines. They are nothing more than a starting point for discussion among the producers and consumers of formal education to improve efficiency and equity.

To increase the value of human capital with optimal use of resources will require significantly different approaches than are now being used in most poor countries. The evidence increasingly shows that the early factors which determine cognitive and noncognitive traits need increased understanding and investment. The traits required by occupation as well as leisure need to be more systematically considered than they have in the past. The question 'learning for what' is essential for both individuals and societies. What is called for is an integrated strategy for investment in human capital that considers the potential contribution of all human capital inputs. Such a strategy would assist in reduing past inefficiencies and ineauities and increasing the returns to scarce resources. RE-SCHOOL AGE INVESTMT IN HUMAN CAPITAL

Marcelo Selowsky

"It is true that schools have 'inputs' and 'outputs', and that one of their nominal purposes is to take human 'raw material' (i.e. children) and convert it into something more 'valuable' (i.e. employable adults). Our research suggests, however, that the character of a school's output depends largely on a single output, namely the characteristics of the entering children. Everything else - the school budget, its policies, the characteristics of the teachers - is either secondary or completely irrelevant."

Christopher Jencks, Inequality: A Reassessment of the Effect of FamilY and Schooling in America, p. 256 (Basic Books, 1972)

I. INTRODUCTION

The above statement by Jencks is perhaps a suggestive way of introducing the subject of investment in human capital into a workshop concerning the economics of education. It is not obvious that such statement could be less relevant for developing countries.

The relevance of preschool investment in human capital - for the process of human capital formation in general and formal schooling in particular - rests heavily on the following set of evidence:

(1) The acceleration of the rate of enrollment in primary schools in less developed countries is and will be characterized by drawing an increasing number of children from lower income families. In other words the ratio of children from low income families in the elementary schooling system will increase over time.

(2) There is a growing empirical evidence showing that preschool children from poorer segments of the population in developing countries have a lower performance in any type of mental than matching controls from higher income groups. Large part of this evidence has been generated in medical studies attempt- ing to isolate the effect of early malnutrition on mental development (Monckeberg, 1967; Kardonsky,et. al, 1971; Robles et. al, 1959). -5 -

(3) The recent literature in the field of education and psycho- logy suggests that even heritability explains an important fraction of children's intelligence scores (Jensen, 1969) environment is still crucial in such explanation (Jencks, 1972) and particularly true for environment at early ages of life (Bloom, 1964).l/

(4) There is a growing literature in the medical field attempting to show that early protein type malnutrition - a phenomenon that characterizes a large fraction of children in developing countries (see surveys by Woodruff, 1966; Revelle and Frisch, 1967; Frisch, 1966; Guzman, 1967) - adversely affects mental performance as well as children's psychomotor activity (for a survey see Berg, 1973; Craviotto and De Licarde, 1973).

(5) Considerations (3) and (4) would suggest that the determinants of deficits in mental development in preschool age children - as noted by (2) - are not completely exogenous to public policy.

If we accept (1) and (2) it will be true that the elementary schooling system in developing countries will be facing an increasing deterioration of its (entering) "raw input". On the other hand if the productivity of school inputs (in the production of abilities, however defined) is largely dependent on the quality of that "raw input" it will be true that the effect of schooling might be in the future highly sensi- tive to policies concerning preschool types of investment in human capital.

As economists two interdependent questions would seem appro- priate: first, to what extent are we overinvesting in schooling vis-a-vis preschool types of investment? Second, what are the types of investment in preschool age that can be manipulated by public policy and what is the "productivity" of such investments?

II. FRAMEWORK

In order to focus on the economic questions of the earlier discussion, let us start with the following simplifying premises:

(a) We want to analyze the contribution of preschool public actions to a vector of cognitive and non- cognitive performance at adult age (or at the age the individual enters the labor force) as measured

1/ According to Bloom "by about age 4, 50% of the variation in intelli- gence at age 17 is accounted for. This would suggest the very rapid growth of intelligence in the earlier years and the possible great influence of the early environment on this development."? (Bloom, p. 68). by available tests.

(b) We are not going to worry at this stage - hopefully it will be discussed in another session of the seminar - about the mechanism by which cognitive and non-cognitive characteristics of the individual affect economic productivity (see for example Gintis, 1971).

(c) The "economic problem" become therefore how preschool investment in human capital can contribute to a "least cost solution" in the production of cognitive and non- cognitive skills at adult age.

A glance to the literature on education and psychology would suggest we can use some of the tools familiar to us: Assune the production of cognitive and non-cognitive performance at adult age (n) can be written as:

(1) I = F(A, S) where A is the vector of abilities of the child when he enters the school- ing system and S is a vector of school and (non-school) environmental in- puts he is exposed to during schooling age. From now on let us interpret S as simply a vector of school inputs.

However, it would seem that some of Jencks' finding also allow us to say something about the shape of (1): according to him not only A has an important independent contribution to R but it also determines the magnitude of the contribution of S.1/ This would mean we could write (1) as:

(2) = AaS-a

From expression (2) it is clear that the contribution or marginal productivity of school inputs (MPS) becomes now a function of the level of ability of the entering child:

(3) MPS = as = (1-a)S

We can now interpret Jencks' statement: the more important is

1/ "We have therefore abandoned our initial belief that equalizing educa- tional opportunity would substantially reduce cognitive inequality among adults. This does not mean that we think cognitive inequality derives entirely from genetic inequality, or that test scores are ixirune to environmental influence. It simply means that variations in what children learn in school depend largely on variations in what they bring to school, not on variation in what schools offer them" (Jencks, op. cit., p. 53). A in the production of - which implies a "largefl value of - the more important becomes the quality of the "raw input" (the value of A) in determining the contributions of schooling to adult abilities.

On the other hand, points (3) and (4) of pages 1 and 2 suggest that A is itself a function:

(4) A = Gf (0,E)

where: G = genetic endowment 0 = index of inputs affecting organic and physical growth E = environmental inputs characterizing the "milieu" of the child

For policy purposes we can further break down some of the explanatory variables of the above expression:

(5) A = Gf {N, H, Eh, EO}

where: N index of the quality of the food intake (nutrition) during preschool age H = index of health services the child is exposed to during preschool age Eh= index of the quality of the home environment the child is exposed to Eo= index of the quality of "out-of-home"f environment during preschool age.

Our first question - are we overinvesting in schooling vis-a-vis preschool investment in human capital - can now be summarized in figure 1. It will be true if, given the (vector) of relative costs of A and 4 we are situated in a point like Pl. Answering such a question will require:

(a) Information about a, or the contribution of A to n; to certain extent it can be obtained through "educational production function studies" (Bowles, 1970) where A is introduced explicitly into such a function.

(b) Information about the coefficients of those explanatory variables of expression 5 that can be affected by public policy.

(c) The resource cost of inducing changes in those variables affecting n, per unit change in n. - 0 -

Section III presents some empirical evidence concerning (a) and (b) out of existing research.

Figure 1

Preschool index of abilityzA

_ _ _ +

S - Schoul inpuvs

III. BRIEF REVIEW OF SOME OF THE EMPIRICAL EVIDENCE RELEVANT TO OUR HYPOTHESIS

A. THE COEFFICIENT OF EARLY ABILITY (a)IN THE PRODUCTION OF TI

To my knowledge no research attemtpting to isolate the "value added of schooling " from the effect of the ability of the entering child has been undertaken in developing countries. Most of the research on this issue has been conducted in the United States by researchers from different disciplines.

An estimate of a requires measurement of abilities in long follow-ups of individuals (at least 15 years) as well as data on all envircnmental variables in the interim period. Almost no study combines both requirements: some of them, particularly undertaken by psychologists (see Bloom, 1964), consist of long follow-up studies of IQ measurements over time; however, most of them have little recorded data on environmental variables the individual was exposed to between these measurements.

We now review some of the research that, one way or another, is suggestive of the notion that early ability (at ages 4-6) is an important determinant of an adult's level of ability as measured by current IQ tests. - 9 -

(a) Bloom's particular interpretation of the results of the m-ajor longitudinal studies undertaken in the United States in the last sixty years is worth mentioning.

These results, suxmtarized in figure 2, show that the correla- tion coefficient between the IQ at any age (T-t) and the IQ score at maturity (T) increases for consecutive lower values of t. Moreover such a relationship appears to be quite similar across studies "done wiith different groups of children, in different parts of the country, with different examiners, and at different times."

Figure 2 90 '

45 S C/ 30-

+Age at 15 - n"tMrty I --- 3zrl8~ey 18 | 1.:a=-e n - 16 Mc k 18 0 t ---- A- . ( rs) 16.4 | - --- ~~Ar.r3or Of)osn 16 4

1 3 5 7 9 11 13 15 17 Age What is relevant to us is the particular interpretation Bloom gives to the behavior of the correlation coefficient. His interpretation follows a line in psychology originally developed by Anderson, (Anderson, 1939), called the Overlap Hypothesis: this hypothesis interprets the correlation coef- ficient among two (longitudinal) measurements of intelligence as the "percentage of elements which are common to the two sets of measures involved." This leads Bloom to conclude that "in terms of intelligence measured at age 17, at least 20% is developed by age 1, 50% by about age )j, 80% by about age 8 and 92% by age 13."

(b) Jencks' "path model of intergenerational mobilityt" attempts to isolate the effect of an IQ measure at 11 years (IQ) from the educational attainment of the individual (E) on the Armed Forces Qualification Test (AFQT), (Jencks, 1973). The Beta (regression) coef- ficients between IQ and AFQT and between E and AFQT turned out to be .80 and .20 respectively; in other words, holding education constant, - 10 -

one standard deviation change in the early IQ score would induce 0.80 of one standard deviation in the AFQT score.

If Bloom is correct it is plausible however that the regression coefficient obtained by using an IQ score at age 11 would represent an upward bias estimate of the contribution of an earlier IQ score (at pre- school age).

(c) A research by John Conlisk using longitudinal data on students IQ scores found the following regression equations (Bowles, 1970):

1Q1 8 = 4.77 + .490 IQ1_5 + 1.514 years schooling R =45 (6.44) (.099) (.358) 2 IQl8 = 8.11 + .527 IQ6_g + 1.051 years schooling R =49

(5-74) (.093) (.367) where the subscript of IQ denotes the age range at which the test was administered and where standard errors are in parenthesis.

Figure 3 shows the trade-off between early IQ and years of schooling in the production of later IQ (IQ17) implicit in the above results.

Figure 3

Early IQ IQ isocuant"

17s o

1QI15

years of schooling - 11 -

According to those results 3 points of IQ at ages earlier than 5 are a substitute for one year of schooling; for IQ at later ages (between 6 .nd 8) 2 points of IQ are a substitute for one year of subse- quent schooling.

B. EVIDENCE CW THE DErERMINANT OF PRESCHOOL ABILITY SCORES (A). THE NCN-GENErIC DETERMINANTS

1. GCeneral Considerations

(a) For our purposes what is important is to identify variables determining A and able to be manipulated by policy instruments usually available to governments. Very possibly the "non-genetic variables" are the ones which fall in this category of variables.

By now it is well accepted that an important fraction of children's intelligence scores is explained by heritability. The recent discussion has centered on the order of magnitude of such explanation: in this respect we quote Jencks "Whereas Arthur Jensen and others have argued that 80 percent of the variance in IQ scores is explained by genetic factors, our analysis suggests that the correct figure is probably more like 45 percent."

The question remains to what extent the result of such studies would change if undertaken in developing countries. The reason is that perhaps the variance of other explanatory variables colinear to genetic endowment is larger in developing countries than in the United States, where most of the above studies have been undertaken. If this is true the (net) explanatory power of heredibility on early IQ in developing countries would be lower than the estimates obtained for the United States. For our purposes this is an important conclusion: it means an increased importance of the explanatory variables able to be mani- pulated by policy, at least in the range of the value of the variableo relevant to developing countries.

(b) At this stage it is perhaps worth asking ourselves a pragmatic question: is it worth to disentangle the net effects of the different non-genetic variables to which low income groups'children are exposed to and which - as a package - are contributing to low preschool ability scores? If it is true that children from lower income groups - subject to a package of nutritional, health and environmental depriva- tion - score worse in mental tests, why not affect directly the whole package of these variables?

'wo kinds of considerations would reject such a view. First, some of the variables in that package are difficult to manipulate from an institutional point of view; and we do not know to what extent; - 12 -

such variables are perhaps the "true" explanatory variables of children's performance; in such case manipulating the rest of the package would not have a major effect on such a performance.

Second, it is realistic to assume that the resources available for such public programs will be highly constrained, particularly because they involve a sharp redistributive policy. In that case we are interested in identifying those variables who have the major impact per dollar spent in manipulating that variable; this requires necessarily an estimate of the net impact of such a variable.

(c) We proceed now to review some of the literature that, one way or another, gives some information about the net effect of the non- genetic variables outlined in expression 5.

2. The Effect of Early Malnutrition

The causal hypothesis by which early malnutrition, especially a deficit in the intake of llhifh quality" proteins, affects mental function- ing is basically a medical one_A. Nutrient deficiency produces a damage in the central nervous system given that early brain growth is largely a process of protein synthesis. This has been confirmed in experiment with animals and by preliminary findings of reductions in the number of brain cells in dead children who suffered severe malnutrition (Winick, 1969, AmbrosiusP 1951; Brown, 1965).

What becomes relevant is to what extent these organic changes affect learning and behavior as measured by available test scores. Craviotto and De Licardie present in their survey a review of experin,ents undertaken in a variety of countries which tend to support such a hypo- thesis; what we want to emphasize here,however, is the fact that some particular types of abilities that seem to be affected by malnutrition appear to be crucial for further learning; If this is true-early malnutri- tion would condition the effectiveness of school inputs at later ages. Table 1.presents a survey of some studies whose specific aim was to study the effect of malnutrition on different types of intersensory integration abilities crucial for basic learning.

I/ "High quality" proteins provide all of the so-called essential aminoacids. Proteins of animal origin provide all of such aminoacids. - 13 -

Table 1

Authors Deficit in Performance Probable effect on consequent learning

Craviotto and Auditory-visual integra- reading ability De Licardie, 1969 tion (Mexico)

Craviotto et. al, 1969 Visual-kinesthetic integra- writing and drawing (Mexico) tion abilities

Chapakam et. al, 1968 Visual identification reading abilities (India)

Craviotto et. al, 1966 ) (a) Kinesthetic-visual

Craviotto et. al, 1967 ) (b) Kinesthetic-haptic (Mexico, Guatemala) ) general learning abilities ) (c) Haptic-visual Guthrie et. al ) (Philippines) ) (d) Auditory-visual

Source: Craviotto and De Licardie, 1973 (see references). - 14 -

Other causal mechanism by which early malnutrition affects learn- ing have been advanced in the literature. There is some evidence showing that infectious diseases are likely to be less severe and less frequent in well nourished children (Scrimshaw, 1961); to the extent infectious diseases affect the child's responsiveness to his environment it affects his cognitive development.

Apathetic behavior has been one of the most clear effects of malnutrition in almost all studies. Craviotto and De Licardie have an interesting hypothesis about the further effect of apathy: "It shoild be recognized that the mother's response to the infant is to a consider- able degree a function of the child's own characteristic of reactivity .... Apathetic behavior in its turn can reduce the value of the child as a stimulus and diminish the adult's responsiveness to him. Thus, apathy can provoke apathy and so contribute to a cumulative pattern of reduced adult-child interaction."

3. The Effect of Early Environmnent

This is a difficult subject to summarize, with a huge litera- ture and with contradictory interpretations of the same data by social scientist of the same discipline. One phenomienon is striking: the little research that has been done in this area in developing countries, vis-a-vis developed countries, particularly the United States.

Let us start with a policy oriented approach: We can define basically two types of environment the child is exposed to at preschool age, home environment and out-of-home environn,ent. The policy options are to change the quality of both types of environment and/or change the nmix"', to change the total fraction of time the child is exposed to a particular environment.

F. _u*e 4 BDC

j,out~de ome H hours per year Ee t6ide\j |>ho=e e exposed to the environment

HH e e

a t home

Age BDC B1oom's Deeeloptz.ent Curve - 15 -

Figure 4 shows, under a particular setting, a hypothetical distribution of the time spent in both environment; the older the child the larger the fraction of time he spends (or can spend) in an out-of- home environment. On the same graph we plot an index of Bloom's develop- ment curve (BDC); the shaded area represents the limit of the variation that the quality of the environment can produce at different points of the development of the child.l/

3(a) Changing the Out-of-Home Ehvironment

The best examples in this field are the large scale programs of prsschool compensatory education (between age 3 and 5) undertaken in the United States, particularly the Headstart program. The Rand Corpora- tion has undertaken a survey of about all the evaluation research of such programs (Averch et. al, 1972). Even though there is a wide disagreement about the interpretation of such evaluations it would seem the results have not been encouraging.

Those preliminary findings concerning large scale compensatory programs in the United Stattes have led researchers into two new areas of study: First, to what exte-nt such findings are a result of the failure of such programs to adapt themselves to the characteristics of disadvan- taged children. To a large extent wide scale programs like Headstart were originally based on the Montessori model of the nursery school, which originally was adopted by higher income families, and by the movement freeing young chidren from "mothers' strict dis- ciplinary controls"l and whose aim was free play.

But "Headstart is not synonymous with compensatory education; compensatory education has not failed. Investigations of compensatory education have now shown that traditional play school has little to offer the children of the poor, but programs which made an effort to inculcate cognitive skills, language skills and number skills, whether they be taught directly or incorporated into games, show fair success." (Mc.V. Hunt).

The second line of research stresses the fact that current com- pensatory programs start too late, in the sense that - if Bloom is correct - the child by age 3 or h has already been conditioned by the environmental deficits in the family (Weikart and Lawbie, 1970). The main constraint in pursuing this line of research is that very possibly there is a limit to the minimum age a child can be physically withdrawn from the family in order to be exposed to an institutionalized program.

1/ One of the major conclusions of Bloom's study is that "variations in the environment have greatest quantitative effect on a characteristic at its most rapid period of change and least effect on the characteristic during the least rapid period of change"(Bloom, op. cit., p. vii). - 16 -

Outside the United States we have found a piece of rejearch which must be mentioned (McKay M., McKay A., Sinisterra L., 1970). This research - undertaken in Cali, Colombia - attempts to identify the types of intkrvention (nutritional supplementation as well as behavioral sti- mulation) necessary to overcome specific mental deficit in preschool children (age 3) from the lowest economic level families of -hat city. The importance of this research stems from the fact that, (a) the children analyzed are not characterized by extreme malnutrition, the kind of cases usually studied in the T"pure malnutrition studies." They represent more a typical situation of low income families in urban areas and therefore more relevant for our purposes. (b) A partic- ular emphasis is being given to analyze the separate effect of particular types of stimulation interventions on specific mental tasks of the child relevant for further learning. Their preliminary findings showed that particular stimulation and nutritional interventions at age 3 can boost certain mental capabilities over and above the performance of well nourished children from similar income groups.

3(b) Home Eavironment Before Age 3

Bloom's bypothesis and the fact that probably there are institutional constraints on the earliest age a child can be drawn from the family into an out-of-home compensatory program has led some researchers into new areas of study: the effect of different rearing practices and different iaother-child interactions before age 3. In this respect we quote Kagan (Kagan, 1970), "A final strategy, not exclusive of the first two (school and preschool years 2½-5) is to change the mother's relationship with her infant. The idea for this suggestion rests on the assumption that a child's experience with his adult caret aker during the firet 24imonths of life are major determinants of the quality of his motivation, expectancy of success, and cognitive abilities duiring the school years. In a moment we shall consider data in support of this position."

In an experiment with 140 white infants (before 27 months) of dAffereat socioeconomic classes Kagan found significant differences In fixation time, vocalization and fear. In another experiment 60 ten- month white girls from two different socioeconomic groups were studied.l/ l/ The socioeconomic group8 were characterized as follows: In the upper one, one or both parents had graduated from college and the father had a professional job. In the lower one, either one or both parents had dropped out of high school and the father was working at a semi- skilled or unskilled job. - 17 -

The families were visited and the child-mother interactions were recorded. In the higher socioeconomic group the mother "spent more time- in face-to-face posture, more time talking to her and issued more distinctive vocalization to the infant. They were more likely to enter- tain their children with objects, to encourage walking and to reward them for mastery." Behavior of the infants at the laboratory showed that those belonging to the upper group were better able to differentiate meaningful from wn-meaningful speech and its source. At the same time they showed a stronger will of resolving the discrepancy of acoustic differences between different voices.

The Ypsilanti Carnegie Project has found an important effect on the mental growth of young infants of programs where specially trained teachers work with the mother and the infant at home. The main objective of the program has been for the teacher to affect the child via the mother (Weikart and Lambie, 1970).

Other lines of research concerning the effect of very early environment refer to brain damage out of being reared in the dark. None of this research has been undertaken with humans yet; however experiment with different animals seems to show a very clear result (Mc. V.Hunt, 1969).

IV. WHRE DO WE GO FROM HERE7

The research implications for developing countries out of some of the earlier hypothesis are enormous and out of the scope of this particular vorkshop. However, some priorities ought to be pointed out. Given the scope of this workshop I have chosen the following criteria in such a selection:

(a) Research that can be helpful in guiding policy instru- ments available in the short run.

(b) Research requiring the cooperation of the existing logistics of the education system.

(c) Research whose policy .mplications are directly relevant to existing educational systems.

1. Additional information concerning A in developing countries

Three questions concerning the levels of abilities of entering students (A) appear relevant for further exploration: - 18 -

(i) How large are the differences in A across socio- economic and ethnic groups on a country wide basis?

Up to now this information has been obtained through isolated sarples and by a variety of scientists of different disciplines and therefore they are hard to compare.

Is it possible to institutionalize a generalized common test of abilities to be administered, in groups and by the same schools, to entering children? What are the relevant questions to be asked in these tests? What can educators suggest in this respect?

(ii) What are the socioeconomic and ethnic groups that, in a particular country, will be incorporated into the elemnentary schooling system during the next decade? How do they perform in the test outlined in (i)?

(iii) If it is true that the level of A will be changing - given the information obtained through (i) and (ii), - what are the implications for changes in the quality and types of school inputs? Are certain types of school inputs better substitutes for A than other ones?

2. Affecting the determinants of A

(i) Policies to change the "out-of-home environment" through preschool compensatory programs on a wide scale basis would seem difficult to undertake in the short run; unless we think of those programs as simple extensions of the existing elementary schooling system in such a way they can simply draw children one or two years younger into Kindergarten programs. However the United States' experiences has shown that simple exten- sions of the t"kindergarten type" are not sufficient or properly designed to compensate for the environmental deprivation low income children have suffered before. A much more complex type of program appears to be required.

A partial substitute for the above solution, at least in the short run, is a policy attempting to correct the fact that lower income children enter primary schools at a later age (one to three years later) than higher income students. This evidence is at least clear for . An interesting research topic in this respect will be to study what determines the parents decision concerning the age at which they send children for the first time to school. (ii) How can we use the logistics of the existing educational system to affect the determinants of A that take place at home before age 3?

In the short rum ad-hoc educational programs for young women concerning child rearing practices would provide one type of solution; it is one kind of education for which we economists never computed rates of return!

From our earlier sections it is clear what ought to be emphasized in such type of educational programs:

(a) Infant nutrition, with a particular emphasis on breast feeding

The decline in breast feeding practices is one of the main determinants of early protein malnutrition.l/ On the other hand the resource cost of substituting breast milk appears to be quite large: Preliminary estimates by Berg (Berg, 1973) suggest that if 20% of the mothers in the urban areas of developing countries do not breast feed the loss in breast milk is $365 million. If half of the other 80% do not continue to breast feed after the first six months the total loss reaches $780 million. This is an important area to be researched: what deter- mines the length of breast feeding and how could it be lengthened through educational prograns?

(b) Child rearing practices concerning early stimulation

Educational programs concerning this issue involve some preliminary research which, to my knowledge, has not taken place on a wide large scale in developing countries. How different are child rearing practices across families .in developing countries? What are the factors determining these differences? Are they related to income groups or to particular ethnic groups of the population?

and. cars~ Extel21 of Breast Feeding in .7elected Cotnrtries atId Years, 19?40-71 Country Year Perce,if of babies breast-fed 0 50 ?/tile: at 13 1?on0ths 1960 I 068 - ,Ak.ricv: at 6 monis 1960 _| 1966

Philippines.: at 12 ,tio,llits 1958 1968 Signapore: ot 3 mr,11/1rho 1951 1971 United States. ort leasil?g 11ospita! 1946 1966

Amirnp!RA~_ro. n-n ri 'St. - 20 -

REFERENCES

1. Ambrosius, K., "El Comportamiento de Algunos Organos en Ninios Con Desnutricion de Tercer Grado", Bol. Medico Hospital Infantil, Mexico, 1951.

2. Anderson, J., "tThe Limitations of Infant and Preschool Tests in the Measurement of Intelligence" in Journal of Psychology, 8, 351-379, 1939.

3. Averch, H. et. al., How Effective is Schooling? A Critical Review and Synthesis of Research Findings, the Rand Corporation, 1972.

4. Berg, A., The Nutrition Factor, Its Role in National Developmnent, MIT Press, 1973.

5. Bloor., B., Stability and Change in Human Characteristics, Wiley, 196h. 6. Bowles, S., "Toward an Educational Production Function" in (Hansen, ed.) Education, Income and Wealth, N.B.E.R., 1970.

7. Brown, R., "Decreased Brain Weight in Malnutrition and its Implications" in East Africa Medical Journal, 42, 1965.

8. Craviotto, S. and De ticardie, E., "The Effect of Malnutrition on the Individual" in (Berg, et. al., ed.) Nutrition, National Development and Planning, MIT Press, 1973.

9. Frisch, R., "World Food Supplies", in World, War and Hunger, Hearings before the Committee on Agriculture, House of Representatives, Serial W, Part I, Washington, 1966, pp. 41-51.

10. Gintis, H., "Education, Technology and the Characteristics of Worker Productivity", A.E.R., 61, 1971.

11. Guzman, M., "Impaired Physical Growth and Maturation in Malnourished Populations", in Scrimshaw and Gordon (eds.), Malnutrition, Learning and Behavior, MIT, 1967.

12. Jencks, C., Inequality: A Reassessment of the Effect of Schooling in America, Basic Books, 1972.

13. Jensen, A., "E&vironment, Heredity and Intelligence", Harvard Educa- tional Review, June 1969.

14. Kagan, J., "On Class Differences and Early Development" in Denenberg (ed.), Education of the Infant and the Young Child, Academic Press, 1970. - 21 -

15. Kardonsky, V., et. al., "Cognitive and Emnotional Problems of Chilean Students (7 to 10 Years) in the Northern Section of the City of Santiago", Department of Psychology, University of Chile, 1971, (mimeo).

16. McKay, H., MacKay, A., and Sinisterra, L., "Behavioral Interventions Studies with Malnourished Children", Western Hemisphere Conference on Assessment of Tests of Behavior from Studies of Nutrition, Puerto Rico, October 1970.

17. Mc. V. Hunt, J.., "Has Compulsatory Education Failed? Has it Been Attempted?", Harvard Educational Review, Spring 1969.

18. Monckeberg, F., Donoso, F., Valiente, S., Arteaga, A., Maccioni, A. and Merchak, N., "Analisis de las Condiciones de Vida y Estado Nutritivo de la Pbblacion Infantil de la Provincia de Curico", Revista Chilena de Pediatria, 38, 522, 1967.

19. Robles, B. et. al., "Influencia de Ciertos Factores Ecolo'gicos sobre la Conducta del Nino en el Medio Rural Mexicano", IX Reunion, Asociacion de Investigacion Pediatricas Cuernavaca, Mexico, 1959.

20. Revelle, R. and Frisch, R., "Distribution of Food Supplies by Level of Income", in The World Food Problem, The White House, 1967.

21. Scrimshaw, N., "Nutrition and Infection", in Brock, J., Recent Advances in Human Nutrition, London, 1961.

22. Weikart, D. and Lambie, D., "Early Ehrichment in Infants", in Denenberg (ed.), Education of the Infant and the Young Child, Academic Press, 1970. 23. Winick, M. and Rosso, P., "Head Circumference and Cellular Growth of the Brain in Normal and Marasmic Children", Journal of Pediatrics, May 1969.

24. Woodruff, C. W., "An Analysis of the I.C.N.N.D. Data on Physical Growth of the Pre-School Child", in Preschool Malnutrition, National Academy of Sciences, National Research Council, Washington, D.C., 1966. - 22 -

RAPPOCRTER'$S COMMENTS

The main focus of Mr. Selowsky's paper centered on the impor- tance of preschool age investment in human capital in determining the effectiveness of further investment in formal schooling. If there is an acceleration of the rate of enrollment in primary schools in LDC's, very probably it will be characterized by drawing an increasing number of children from lower-income families; if this is trye, the quality of the "raw input" (or abilities of the entering child) faced by the system will decline over time. This lowering of A (abilities) is attributable to the observation that "there is a growing empirical evidence showing that preschool children from poor segments of the populatior. in LDC's have a lower performance in any type of mental test than matching controls from higher income groups.", If this low (initial) level of A can be attributed to preschool nutritional and environmental deficits - able to be manipulated by public policy - the hypothesis arises to what extent the effectiveness of future investment in schooling might be highly sensitive to today's preschool age invest- ment in human capital.

The discussion of the paper then led to the following remarks:

A. The Role of Schools and Nutrition

1. What role can schools play and also relate their activities to overall broader policies?

(a) Schools can be used as food production elements and as instruments to reach other groups; e.g., mothers.

(b) Schools may be viewed as the vehicle through which compensatory programs may be introduced. However, this approach may place too high a burden on schools and it is not clear exactly what the trade-offs are between what the family can provide vis-v-vis the school. In short, are we asking the schools to do too much?

2. How can pre-school support in nutrition actually be carried out? As indicated by many medical researchers, measures to improve the nutritional status of individuals must be undertaken before 24 months of age.

3. In operational terms, if the schools are to play an effective role in improving the nutritional status of school-age children, then school programs utilizing teachers and possibly women from the local areas might contribute to improving the nutritional level of the target group. The participation of the aforementioned groups might provide for the development of linkages between school children and the community. - 23 -

4. What influence have school food pro.,rams had in improving food habits? Can schools really change the attitude of persons toward food habits?

The discussion then moved to the effect of nutrition on ability. It was pointed out that raising the cognitive ability of persons may be a waste since in fact, cognitive ability explains little individual success measured by lifetime earnings. Several participants felt it was ludicrous to rationalize the value of nutrition. It was z obvious that healthier mothers have healthier offspring. Thus, th4_- part of the discussion became very disjointed and the participants did not address themselves to the topic. This was further demonstrated by the discussions centering around the reasons why lower class women refuse to participate in welfare programs whereas their middle class "sisters" do. The Bank, however, is hardly interested in "give-away" programs!

B. Policy Implications

In conclusion, some of the participants suggested that:

(a) Schools should adopt both a production and distribution function. Thus it follows that teachers must do other jobs to accommodate other roles since the education resources should not be designed only for educational purposes;

(b) Nutrition components should be introduced within teacher training institutes; and

(c) Research should be undertaken to clarify the relation- ship between feeding habits - parental behavior and achievement. This would also include an investigation into the inefficient use of income and the effect of improved information systems and resource allocation on mothers.

Mrs. Rachael Brandenberg - 24 -

EDUCATION, MIGRATION AND FERTILITY

Michael P. Todaro

Basic Issues and Summary of Arguments

Education appears to be an important factor influencing both rural- urban migration and levels of fertility. The relationship between education and migration, however, is apparently more powerful than that between education and fertility. Moreover, existing empirical evidence reveals that the mechanism through which education influences labor mobility is more direct (i.e., through its impact on higher income expectations) than in the case of fertility.

Numerous studies of migration in the less developed countries have documented the positive relationship between the educational attainment of an individual and his propensity to migrate from rural to urban areas. Basically, individuals with higher levels of education face wider urban-rural real income differentials and higher probabilities of obtaining modern sector jobs than those with lower levels of education. The probability variable in particular accounts for the continual influx of the more educated rural migrants in the face of rising levels of urban unemployment among the less educated.

With regard to the education and fertility relationship, the evidence is less clear. While most studies reveal an inverse relationship between the education of women and their fertility, particularly at lower levels. of education, the mechanism through which education influences family-size decisions is still subject to considerable speculation.

Assuming that lower levels of urban unemployment (especially among the .dueaated) and lower levels of fertility are important policy objectives for both LDC governments and international assistance agencies, the basic issue is whether or not the continued linear expansion of the formal educa- tional system ( and the resource allocation decisions implicit therein) will ameliorate or exacerbate the twin problems of rising urban unemployment and rapid population growth. It is our contention that, given limited government and donor agency resources, the further rapid quantitative expansion of school places beyond perhaps basic education is both undesirable and unwise for the following two reasons:

1. Any rapid expansion of the formal primary system creates inexorable pressures on the demand side for the expansion of secondary and tertiary school places. This is because of the widening divergence between private and social returns to education, the tendency for scarce jobs to be rationed by progressively higher educational certification, and the political dimensions of educational investment decisions (see Edwards and Todaro, 1973a and 1973b). The net result - 25 -

is the widespread phenomenon of over-expansion of school places in terms of real resource needs in many LDCs and the concommitant dilemma of rising levels of urban unemployment among a cadre of increasingly more educated and more politically-vocal migrants;

2. If, as many have argued, the education of women does affect their fertility behavior primarily through the mechanism of raising the opportunity cost of women's time in child- rearing activities, then it follows that, unless sufficient employment opportunities for women (as well as men) can be created, the reliance on educational expansion as a policy instrument for lowering fertility will be weak, if not totally ineffective.

Education aid Migration

The accelerated influx of rural migrants into urban centers is a phenomenon common to almost every less developed nation. The extraordinary growth of urban populations during the past decade can be attributed primarily to the large and, in many cases, growing pace of rural-urban migration. Many factors influence the decision to migrate but, by and large, almost all informed observers, regardless of their disciplinary training, agree that the economic factors predominate. Sample surveys in Africa, Asia, and Latin America invariably reveal that the overwhelming reason why people migrate is because of the existence of a wider range of higher paying job opportunities in urban areas. (Byerlee, 1973; Todaro, 197-!; Herrick, 1969; IERD, 1971). Furthermore, individual country surveys consistently show that people living in rural areas who have been to school are far more likely to migrate than people who have had little or no formal education (see, for example, Lin and Chen, 1973; Remple, 1970; Sabor, 1972; and Herrick, 1969). In fact, there seems to be a consistent, positive correlation between an individual's level of education and his propensity to migrate.

In a series of articles, I have attempted to provide a theoretical framework for understanding the phenomenon of high, and in some cases, accelerating rates of rural-urban migration in the face of rising levels of urban unemployment (Todaro, 1968, 1969, 1971, 1973; and Harris and Todaro, 1970). By focusing on "expected"' income differentials, encompassing both the absolute urban-rural differential and the probability of obtaining an urban job, this framework facilitates, I believe, a better and more accurate analysis of the dynamics of rural-urban migration. This is especially so when analyzing differential rates of migration by educational levels. Individuals with higher levels of educational certification tend to have a higher propensity to migrate than those with less education because: (1) the income disparity between what they can earn in urban areas as compared to their rural opportunity cost is larger, and (2) the probability of their being successful in obtaining a lucrative modern-sector job is higher than for those with less education. - 26 -

The reason why the more educated are in an advantageous position and have a greater probability of finding higher paying urban jobs than the less educated is due not so much to their superior training as it is to the widespread "filtering down" or"occupational displacement" phenomenon which pervades the labor markets of LDCs. (See Edwards and Todaro, 1973a). Faced with an excess of job applicants over job openings, governments and private employers tend to select individuals on the basis of their level of educa- tional certification. As the urban labor supply continues to outpace demand, two forces are set in motion. On the demand side, jobs which were formerly filled by, say, primary school graduates now require a certificate. On the supply side, job aspirants now need to get some extra years of further education in order to "qualify" for jobs which only a few years earlier were being filled by those with less education.

The net result of these two forces is the burgeoning of private demand for ever higher levels of formal education in order to meet more stringent job requirements (and the consequent explosive demand for primary education as a necessary first stage), the emergence of rising levels of unemployment and underemployment among the more educated, the growing pro- portion of the more highly educated among the migrant populations, and the gradual drying-up of employment opportunities for those with limited educa- tion. Finally, given the strong political pressures for governments to try to satisfy the aggregate private demand for education (even though the social return on such investment is likely to be considerably lower than net private benefits), there is an inexorable tendency to expand formal educational facilities well beyond the point where such investment can be said to be economically justified.

In order to break this vicious cycle of accelerated rural-urban migration leading to rising unemployment and underemployment, causing job rationing by educational certification which, in turn, causes burgeoning private demands for education which place severe pressures on governments to linearly expand school facilities, etc., inmmediate steps must be taken by LDC governments to change the prevailing system of economic incentives and political constraints (see Edwards and Todaro, 1973b). Restructuring edu- cational systems to minimize the inherent (and, in many cases, inherited) urban bias and to orient the curriculum more towards the real development needs of the nation (e.g., towards rural development), will have limited success in either curtailing rural-urban migration or changing students' attitudes in the absence of necessary fundamental changes in incentives outside the educational system.

Education and Fertility

Educational attainment is thought to influence many forms of behavior, including,in the case of women's education, fertility behavior. On the one hand, there is the well-known direct relation between a women's educational attainment and her propensity to enter the labor force. On the other, there is growing evidence of an inverse relationship between - 27 -

a woman's education and her fertility (see, for example, Miro and Mertens, 1968; Ben-Porath, 1973; and Rich, 1973). The apparent empirical linkages between educational attainment, labor force participation, and fertility have been widely interpreted by economists to be the consequence of a causal mechanism in which education increases the opportunity cost of a woman's time through the positive effect which it has on her earning oppor- tunities in the labor force. Since it is assumed that child rearing represents a very time-intensive activity for the mother compared with other goods, it follows that the price of children relative to that of other goods moves together with the price of a woman's time. By linking fertility decision3 within the framework of recent reformulations of the micro-theory of household behavior. (see, for example, Becker, 1965; and Lancaster, 1966), the conclusion is drawn that the rise in the price of a woman's time (or alternatively, the opportunity cost of children) causes her to reallocate her time from non- market activities and leisure (i.e., being a mother) to market labor force activities. Her desired and actual completed fertility will, therefore, decline. In short, education's effect on the shadow price of a woman's time is thought to account, within the so-called "New home economics," for the widely observed inverse empirical association between a woman's educational attainment and her fertility behavior.

The most comprehensive attempt to test this education - cost of time - fertility hypothesis is Yorami Ben-Porath's recent paper on education and fertility in Israel (Ben-Porath, 1973). Using both longitudinal and cross-sectional data, Ben-Porath finds that the evidence does support the expected negative association between fertility and the education of women (whereas the association between fertility and the education of men is ambiguous). However, when the data is disaggregated by level of education, the inverse relation between fertility and education turns out to be steep only at the very low levels of education (one to four years) and tends to flatten and, in some cases, even become positive at the top levels. Ben- Porath concludes that "the relation among education of women, the wage rate, and labor supply indicates that at the low levels of education, where the decline in fertility is large, the differentials in labor supply are modest, while at the top educational categories, where differential fertility is modest, the differences in labor supply are large. . . Thus, my impression is that the simple cost-of-time hypothesis, while consistent with some of the evidence, leaves some important aspects of the fertility-education rela- tion unexplained" (Ben-Porath, pp. S204-5).

Clearly, there are many ways in which education might influence fertility behavior through other economic and taste effects. Unfortunately, an appropriate methodology for untangling these lines of causation has not yet adequately been formulated or tested. Until this is accomplished, the promotion of expanded women's education simply as an effective anti-natal policy instrument should be approached with considerable caution. - 28 -

There are other reasons why one should be wary of the education - fertility hypothesis. First, if the expansion of women's employment oppor- tunities is in fact the vehicle through which education affects fertility, it may be important to identify the relative contribution of investment in job creating activities as compared to the simple expansion of educational facilities (Edwards and Todaro, 1973). Furthermore, as Tobin has pointed out, it is one thing to find that educated women have fewer children than their less-educated contemporaries; it is another thing to expect that this difference will predict how much a general increase over time in women's education in a country will diminish overall fertility. Clearly, the second effect will be weaker than the first (Tobin, 1973, p. S278).

Second, the education - labor market - fertility hypothesis implies that investments in women's education may be less effective in reducing their fertility in rural areas where few women find jobs regardless of their educational attainment. If reductions in fertility are to be viewed as an important social externality of educating women, it is essential that we know more about how this change in behavior is influenced by education and how it interacts with other household and community forces.

Finally, since educated women comprise a growing proportion of the urban migrant stream, the "filtering down" and "occupational displacement" phenomena described in the preceding section will apply equally to them, perhaps, even more so, in determining their probability of successfully securing wage employment in highly competitive urban labor markets. Those with limited education (i.e., the ones which Ben-Porath found to exhibit the sharpest fertility declines) will have little or no chance of competing successfully for scarce urban jobs.

We may note, in conclusion, that the social value and importance of a purposeful expansion of education opportunities for women may be signifi- cant for a variety of economic and non-economic reasons. However, the rationale for such a differential expansion from the narrow perspective of potential fertility reductions is, in our opinion, simply not compelling, at least until better and more convincing evidence can be brought forward. This is clearly an important topic about which further research is urgently needed. - 29 -

REFERENCES

Ben-Porath, Yoram, 1973, "Economic Analysis of Fertility in Israel: Point and Counterpoint." Journal of , 81, 2, Part II, S202-S233.

Becker, Gary, 1965, "The Theory of the Allocation of Time." Economic Journal, 75:4930517.

Byerlee, Derek, 1972, "Research on Migration in Africa: Past, Present, and Future." African Rural Employment Paper No. 2. East Lansing: Department of Agricultural Economics, Michigan State University.

Edwards, E.O., and Todaro, M.P., 1973a, "Educational Demand and Supply in the Context of Growing Unemployment in Less Developed Countries." World Development, 1, (3-4): 107-117.

, 1973b, "Education and Society in Developing Nations: Conceptual Relationships and Emerging Opportunities." Paper prepared for Conference on Education and Development Reconsidered, Bellagio, Italy, November 1973.

_, 197.3c, "Education and Employment in Developing Nations: Some Main Themes and Suggested Strategies." Paper prepared for Conference on Education and Development Reconsidered, Bellagio, Italy, November 1973.

Harris, John R., and Todaro, Michael P., 1970, "Migration, Unemployment and Development: A Two Sector Analysis." The American Economic Review, 60, 1: 126-142.

Herrick, B.H., 1970, "Urbanization and Urban Migration in Latin America: An Economist's View," The Latin American Urban Annual.

IBRD, June 1971, "Migration to Urban Areas." Economic Staff Working Paper No. 107.

Lancaster, Kelvin J., 1966, "A New Approach to Consumer Theory." Journal of Political Ebonomy, 74: 132-157.

Lin, T.L., and Chen, H.H., 1973, "Rural Labor Mobility in Taiwan." (mimeo)

Miro, Carmen, and Mertins, Walter, 1968, "Influences Affecting Fertility in Urban and Rural Latin America." Milbank Memorial Fund Quarterly, 46, 3.

Rempel, Henry, 1970, Labor Migration into Urban Centers and Urban Unemployment in Kenya. Unpublished Ph.D. dissertation, University of Wisconsin. - 30 -

Rich, Willian, 1973, Smaller Families Through Social and Economic Progress. Overseas Development Council Monograph No. 7, Washington, D.C.

Sabot, Richard H., 1972, "Education, Income Distribution and Urban Migration in Tanzania." Economic Research Bureau, Dar es Salaam, Tanzania (mimeo).

Tobin, James, 1973, Comment on paper by T. Paul Schultz, Journal of Political Economy, 81, 2, Part II, S275-S278.

Todaro, Michael P., 1968, "An Analysis of Industrialization, Employment and Unemployment in LDCs." Yale Economic Essays, 8(2): 329-402.

, 1969, "A Model of Labor Migration and Urban Unemployment in Less Developed Countries." The American Economic Review, 59(l): 138-148.

, 1971, "Education and Rural--Urban Migration: Theoretical Constructs and Empirical Evidence from Kenya." Paper presented at a con- ference on Urban Unemployment in Africa, Institute for Development Studies, University of Sussex.

, 1973, "Rural-Urban Migration, Unemployment, and Job Probabilities: Recent Theoretical and Empirical Research." Paper prepared for International Economic Association Conference on "The Economic Aspects of Population Growth," Valescure, . - 31 -

RAPPORTEUI S COMMENTS

The major part of the session was devoted to a discussion of the relationship between education and migration and the derived policy implications. The remainder focussed on the relationship between education and fertility.

Todaro's model of the relationship assumes that individual decisions - to continue education, to migrate - are detenrined by two functions:

1) the differentials between the prevailing average wage rates which obtain for each educational level and for each sector - rural, urban - subject to the inherent characteristics of the individual (sex, age, etc.), and

2) the objective probabilities for an individual with particular inherent and acquired characteristics of obtaining employment at the associated wage rate in each of the two sectors.

The individual is assumed to maximize some intertemporal function of expected income, which is equal to the prevailing average wiage rate multiplied by the objective probability of obtaining such employment for each set of characteristics and for each sector.

As applied to the normal condition of a developing economy, the model explains the high demand for education and the high level of rural-urban migration as follows:

1) the base wage for less educated labor in the rural sector is very low, especially as compared to the prevailing wage for more educated labor in the urban sector,*

2) the base wage for less educated labor in the urban sector may be somewhat higher, but the probability of obtaining such employment is very small,

3) therefore, the ea:nings foregone by remaining in school are minimal,

4) therefore, students will remain in school until the individual financial constraint becomes binding azid/or the expected income from entering the labor force subjected to the individual intertemporal preference exceeds that expected from remaining in school,

5) in most cases, the probability of obtaining employment in the urban sector will be lower than. in the rural sector, but the wage differential

/ The average marginal product. of labor in agriculture is often asserted to be zero. - 32 -

will be sufficiently large that the expected income in the urban sector will exceed that in the rural sector,

6) therefore, there will be substantial rural-urban migration.

These relationships result in the perverse dynamic feedback system which Dore refers to as the credentialization effect, whereby higher-level degrees serve to ration the insufficient number of jobs with little intrinsic relation to the objective requirements of the job. The process operates as follows:

1) if the wage differentials remain sufficiently large,

2) then the number of graduates from each level of education and the number of such graduates who migrate from rural to urban areas will increase as the population grows and educational opportunity is expanded,

3) therefore, if employment does not keep pace with the supply of graduates at the higher levels,

4) then higher level graduates will take lower level jobs

5) therefore, the prevailing average wage and expecially the probability of obtaining employment at this wage will diminish for lower level graduates,

6) the negative effect on the expected income of lower level graduates will be more significant than the negative effect on the expected income of higher level graduates, 7) therefore, students will desire to remain in school longer, and the access to urban sector employment will become more restricted to higher level graduates,*

Thus, the facts that urban-rural wage differentials are actually widening and that employment at higher levels is not keeping pace with the supply of graduates is especially worrisome.**

* So that we are faced with the dilemma that increased educational opportunity will only accelerate the divergence of the educational pyramid from, any realistic job requirements pyramid (hence the return in terms of economic growth to such investment is likely to be small) while failure to increase educational opportunity will lead to decreased social mobility, given the increasing amount of education required for employment. and the ** A complicating factor is the disparity between wages in the LDC's developed countries for more skilled personnel. In order to retain such manpower, the real wage offered to more skilled personnel must be moderately competitive. Even then, the emigration of high-level manpower is often substantial. This factor suggests that, with respect to certain categories, it will be difficult to reduce or retard the advance of the differential between high-level and less skilled manpower. The implication is that society must exact an obligation in',return for the education it gives to such personnel, if the social investment is not to be lost. - 33 -

Moreover, as Blaug noted, even a general increase in urban employment might not suffice to counter the perversity of this mechanism, since this would increase the probability of obtaining employment and induce rural-urban migration which would restore the old unemployment rates. As such, the rural sector may be compared to a "bottomless sink."

The most significant implication of this is that the wage differentials are the crucial variables which must be controlled.* For example, since causality runs from the wage structure as an independent variable to education as a dependent variable, rural orientation of educa- tion is not likely to alter migration patterns. Rural development and the creation of opportunities to earn an income comparable to those in the urban sector must take first place.

As to the validity of the model and its implications, it was noted that, even controlling for the increase in average educational advance, the rural-urban migrant stream has become more concentrated over time in the higher education categories. This increase in the correlation between education and migration was seen as the expected result of widening urban-rural differentials and increasing credentialization (so that whether or not an individual possesses a certain degree can be seen as a proxy for the probability variable).

Moreover, even when one controls for the fact that there is some migration from rural to urban areas in order to obtain an education (thus raising the education-migration correlation and imolying that causality may run from education to migration), it is found that the partial coeffi- cient of correlation is significant and reaffirms that education leads to migration in the manner narrated above.

It was suggested that the relationship between education and migration might also operate by a change in the individual's intertemporal preference function because of his education. Certainly this would be difficult to determine empirically.

In any case, the dominant considerations would be the differen- tial and probability variables. To illustrate the way in which these two variables interacted to determine migration according to education level, the Tanzanian experience was note(d. On the one hand, rural-urban wage differentials had widened, which in itself would lead to increased migration among all education categories. On the other hand, the probability of obtaining employment at each leve:L decreased, so that higher-level graduates took jobs which would otherwise have been filled by lower-level graduates. Therefore, given the resulting very small probability of employment for lower-level graduates, migration ofisuch lower-level graduates stagnated.

The phenomenon of temporary migration was explored within the construct of the model. Two kinds of temporary migration were distinguished.

* Along with population growth. - 34 -

One kind of temporary migration is seasonal migration, where the demand for labor varies cyclically between areas and individuals migrate so as to maximize income.

The other kind of temporary migration starts off as an intention to migrate for good. Once the irmmigrant has been in the new location for some time without finding a job, however, his subjectively perceived proba- bility of obtaining employment decreases and he may return to the rural sector. This accounts for the observed reverse (gross) migration from urban to rural areas. In this regard, finance problems and the length of unemploy- ment may be seen as the significant variables.

Of the two kinds of migration - seasonal and (intended) permanent- seasonal migration is of decreasing importance. For example, seasonal migrants in Upper Volta were of all ages, whereas (intended) permanent migrants were primarily the young. Given rates of population growth and shifts in the age structure of the population, this is becoming a more serious problem.

Harberger examined the relation of the Todaro model and the concept of filtering down. He posed a two-group model (high and low education, income) where supply exceeded demand for both groups. If education trans- ferred someone from the low group to the high group, did this:

(a) only redistribute income by changing probability variables;

(b) sift between groups according to differential abilities, implying increased productivity (but given an institutional wage);

(c) also change wages outside the, for example, 0-20 per cent unemployment fixed-wage range, so that 80 per cent of wage change would represent additional product.

Todaro responded that the losses in the low group would offset the gains in the high group, because one has to go through the low group to get to the high group and because of the dynamics of increasing certification.

Harberger responded that, in the second and third cases, better qualified persons at each level implied higher product, although wages were unchanged in Case 2.

Carnoy noted that the correlation of nutrition, education, socioeconomic status, etc., implied that, over time, it takes increasingly longer periods to produce the same gain in product.

Blaug described Hargerber's first case as the "screening hypothesis," while the second and third cases implied a positive marginal product of education. He said it was crucial to know the nature of this - 35 - additional productivity. He saw Todaro as relating education to cognitive requirements, but felt that instead non-cognitive requirements were more important. This implies that the marginal productivity of non-cognitive outputs of education increased aS the education level advanced. Edwards observed that the relation of wages to credentials versus marginal produc- tivity related to the cost of education and the job-creation/education tradeoff.

The importance of the family with respect to migration was noted. In India, kinship and friendships links were a major determinant of the localities to which individuals would migrate. Previous immigrants could help new immigrants when they arrivedi. Moreover, there is an incentive for families to educate their children, so that educated members of the family can support the others by sending money home. The West African experience was noted in this regard.

As for policy conclu

Carnoy noted that, in Brazil, migration occurred from cities with higher average income for a particular' occupation to cities with lower average incomes, because in the 'Latter variation and chance of maximum gain were largest. This implied that equalization of variance as well as of averages, would be required.

Ahluwalia indicated -that whether education is a proper policy instrument for migration depends on whether one believes migration is caused by demand conditions with no wage distortion, in which case education is a proper instrument, or one believes migration is caused by distortions, implying large income/employment tradeoffs and calling for work-migration permits which would, in turn, allow education to target in on its objectives.

The last part of the session was devoted to a discussion of the relationship between education and fertility.

The theoretical construct used was that of the child as an investment and consumption good. As an investment good, children provide in the individual case for old age security. Therefore, rising family income implies a decreasing importance of the old-age security function of children.

Rising family income, especially when it is the wife's income which is rising, leads to a set of effects on fertility as a consumption good. If child-raising is seen as a time-intensive activity, the income effect of rising earnings on fertility is ambiguous, although usually positive. The substitution effect is unambiguously negative. - 36 -

The concept of an opportunity cost arising from the time- intensive nature of child-raising, however, would be invalidated by the existence of cheap or zero-cost family substitutes.

On the assumption that economic va-;-ables have some impact on fertility, Todaro noted educational bond schemes which have the government contribute to a child's education in inverse relation to the number of children in the family.

Dore questioned whether economics was paramount in the relation- ship of education to fertility. He suggested that education of the mother led to decreased fertility in the following non-economic ways:

(1) postponement of marriage,

(2) ability to delay gratification,

(3) change in marital relationship, (4) lower infant mortality.

The suggestion that these mechanisms might be exploited by later entry into education and longer retention for women was countered by the possibility that postponers might have just as many children, at shorter intervals.

In sum, the economic and sociological dynamics of fertility are not established with any certainty; and education was not seen to be the best policy instrument for reducing fertility.

Mr. E. P. Jones - 37 -

RADIO AND TELEVISION FOR ED)UCATION IN DEVELOPING COUNTRIES

by

Dean T. :Famison

My purpose in this paper is to discuss the potential role that radio and television have in improving equity and efficiency in the delivery of education in developing countries. In several countries - American Samoa, El Salvador, and the - there have been major educational reforms involving the use of television, and a large number of countries make at least sporadic use of instructional radio. Thus there is growing experience with at least some uses of these media for education; this ex- perience provides the basis for a preliminary assessment of how widespread a role instructional radio (IR) and instructional television (ITV) should play in educational development in the years to come.

Section I of this paper outlines the alternatives open in organ- izing an educational system, with emphasis on the technological alterna- tives. Section II discusses the available evidence on the effectiveness of a number of the alternatives, and Section III summarizes available in- formation on the costs of IR and IT. Finally, section IV draws some policy implications from the cost and effectiveness summaries.

I. ALTERNATIVES FOR FORMAL EDUCATION

In this section I describe in broad terms the alternatives for education in terms of its internal organization. I first categorize these alternatives along a number of dimensions and then more specifically discuss the alternatives on the dimension most critical for cost-effectiveness analysis. That dimension concerns the mix of instructional technologies, which has the most direct impact on cost. The set of alternatives actually available to a decision-maker depends, of course, on his budget and other constraints; the final subsection discusses modeling the effects of the budget constraint in more detail.

Categorization of Alternatives 1/

The categories of alternatives that I will use are:

1/ A category that will not be discussed there is that of organizational alternatives. In the United States now there is discussion of a number of organizational structures differing from those now in common use; these include performance contracting, community control, and voucher finance. - 38 -

1. degree of physical centralization,

2. mix of instructional methods (including the conventional classroom),

3. amount of time the student spends in school,

4. curriculum mix, and

5. certification, promotion, and retention procedures.

I discuss each of these briefly below, then focus in more detail on those most critical for a cost-effectiveness analysis.

Advances in communication and information storage technology have made possible a considerable decentralization of schools. A first level of decentralization would be to perhaps very small neighborhood schools. A more marked level of decentralization would be to the correspondence-school con- cept where the students receive their lessons at home by audio or video lessons (stored or off the air) and interact with the school system by mail or, for developed countries, through their own terminals. This form of in- struction is called 'distance learning' by the British, and it is increas- ingly widely used. Distance learning need not preclude gatherings of stu- dents for athletics, social occasions, or seminars and discussions. Going in the other direction, one can conceive a much larger school groupings than now exist; one argument in favor of these larger groupings might be to pro- mote social and racial integration.

My own guess is that at the elementary level there are only very limited productivity implications for several fold increases or decreases in the present sizes of schools, though I feel this issue should be further examined. Further, in the rural areas that predominate in developing coun- tries, there may be little choice about the size of schools unless one wishes to consider extensive student transportation and residential schools.

The second category of alternatives concerns the mix of instruc- tional methods. I use the term mix to emphasize that in most departures from the present method of instruction the student will be learning from several instructional techniques during the day. In one mix there might, for example, be 2 hours of ITV in a class of size 60 with one para-profes- sional and one older student monitoring, 2 hours of conventional class ac- tivity (size 27), and 1/2 hour with a teacher in a discussion group with 5 or 6 other students. Clearly a great many mixes can be built from the basic array of technological and organizational alternatives now available, and we discuss these possibilities in more detail in the following subsec- tions.

The third dimension of alternatives concerns the amount of time students spend in school--the number of hours per day and the number of days per year. In most countries elementary students spend 4 to 6 hours per day - 39 -

for about 180 days. Using present techniques of instruction, the length of the school year impacts very strongly indeed on costs and it is probably of considerable importance in student learning, as will be discussed in Section II. There is one further aspect of the 'time' question that is much dis- cussed by economists. For students in the higher grade levels, it is argued, there is an opportunity cost to the economy of having the student in school. In estimating the true cost of education one should, then, add in the earn- ings foregone by students due to their being in school. In an overview of results in this area Schultz (1971), estimates that approximately half the cost of schooling at the upper levels in developing countries may be in earnings foregone. Increasing problems of educated unemployment reduce these costs, however. In the discussion of costs in this paper, I will simply note the amount of school time required of students without attempt- ing to assign a value to it.

The final category of alt:ernatives concerns promotion, retention, and certification procedures. The range of options here depends to some ex- tent on the state of testing technology. Though testing and certification procedures have only a small direct: impact on cost, they have an important indirect impact through their influence on the number of students in the system. We return to this point later in this section where drop-out and promotion. rates play a central role in evaluation of alternatives.

Mixes of Instructional Methods

The second dimension of alternatives we discussed in Section II.A concerned the mix of instructional methods construed to include the present method of instruction that involves; a teacher in front of a classroom of students as well as various technologies. I first sketch the conventional alternatives then the technological. ones.

Conventional Alternatives. The conventional alternatives to the present system fall into several relatively simple categories. These are:

1. Changes in teacher quality (i.e., level of intelligence, education, or experience).

2. Changes in the average number of students per class.

3. Changes in the average number of hours per week and weeks per year the student spends in school.

4. Changes in the utilization rate of classrooms.

The feasible conventional alternatives can be characterized for any given annual budget for primary education, B, and number of students to be enrolled, N. Let q be a measure of teacher quality (for operational simplicity, q may have to be a simple measure such as percent of teachers - 4o -

fully qualified or average educational attainment of teachers) and let W(q) be the average annual wage (for full time work) of teachers when their quality average is q. Let C be the average class size, i.e., the average number of students in a classroom with a teacher and let h be the average number of hours per week a student is in class. Assuming, and this assump- tion can easily be relaxed, that a full time teaLier is in class 36 hours per week, the student to teacher ratio, S, is given by:

S = 36C/h . (1)

Increasing class size thus increases S, as does decreasing h.

To continue, let U be the average usage rate of classrooms, i.e., the average number of times they are used per day and let P be an imputed annual price for a classroom. Since the available budget was B and the number of students was N, an average of B/N per student per year is the basic cost constraint. Each student consumes 1/S or h/36C teachers and 1/UC classrooms during the year. Thus the following equation holds as an approx- imation that includes only the major costs:

N (h/36C)W(q) + P/UC = B . (2)

Equation 2 summarizes all conventional alternatives for the primary sys- tem in broadbrush terms. It fails to capture nuances but it specifies, nonetheless, all combinations of teacher quality, class size, hours of class per week, classroom usage rate, and students enrolled that are economically feasible at the prevailing budget, prices, and wages.

Technological Alternatives. It is somewhat more difficult to cate- gorize the technological alternatives than to categorize the conventional ones. There seem to be two broad dimensions along which the alternatives can be arrayed. The first is alternative technologies and the second is alternative uses for technology. Alternative technologies include:

1. Television.

2. Blackboard or still frame television, i.e., tele- vision that presents only alphanumeric characters on line drawings on the one hand or still pictures on the other.

3. Classroom controlled audio-visual media, including tape cassette players.

4. Radio.

5. Computer-assisted and computer-managed instruction (CAI and CMI; with CAI the student is on-line to the computer, with CMI he is off-line).

6. Programmed self-instruction. - 41 -

Alternative uses for techrLology include at least the following four possibilities:

1. Enrichment of learning, i.e., provision of occasional lessons or experiences that the classroom teacher cannot easily provide.

2. Total replacement of the teacher in one or more subject areas.

3. Substantial supplementation of the teacher in one or more subject areas.

4. Distance learning.

Shramm, Coombs, Kahnert, and Lyle (11967) review instances where new media have been used for many of these tasks; and Schramn (1973) provides an up to date account of a number of more recent efforts, particularly with dis- tance learning.

Modeling the Effects of Alternative Budgets and Options

The purpose of this section is to outline a model that can be con- structed to project the number of enrollees, graduates, and dropouts of the elementary education system as a function of budget levels, dropout rates, repetition rates, and the extent and manner in which IR and ITV are used. The output of the system in a given year can be considered to be the func- tion that gives the number of schoo:L leavers at any given level. The term 'level' here could be understood in terms of cognitive or affective states, but for purposes of this model, we will use it to mean grade level. The output function for year t, f (g), will, then give the number of students who leave school in year t after having completed the gth grade. The pur- pose of the model will, then, be to project ft(g) as a function of budgets and other parameters. (The next step beyond projection would be to make the model explicitly optimizing, in terms either of maximizing present value of output - e.g. Bowles (1971) - or minimizing cost - e.g. Schiefelbein and Davis (1974). The rationale for usLng simulation rather than optimization models is that optimizing models are substantially more difficult to imple- ment, and provide little additional information. The extent to which this rationale is correct remains debatedl.)

The model outlined here extends one previously developed 1/ to analyze the potential impact of introducing radio in the elementary educa- tion system of Indonesia. The approach taken in that model has two advan-

1/ See D. Jamison, "Alternative strategies for primary education in Indonesia: A cost-effectiveness analysis," Research Paper 46, Stanford University Graduate School of Business, 1971. - 42 -

tages over other, somewhat similar models. 1/ First, it is designed to allow assessment of the cost and performance impact of the introduction of . Second, it is designed with budget levels exogenous, rather than endogenous; this has the advantage of allowing examination of output trade-offs for a fixed budget (or rate of growth of budget).

Figure 1 on the next page provides a flow diagram for the model; a more detailed algebraic statement of it (in a preliminary form) may be found in the previously footnoted paper by Jamison.

The purpose in sketching this model is to illustrate, first, the manner in which media mix impacts on output both directly and through its effects on learning and, second, the manner in which it impacts on costs and hence the number of students that can be accomodated with a given bud- get. To implement such a model fully requires more empirical information than is yet available on the effects of media mix and time of exposure on student learning and demand for schooling.2/ Still, much is known about media effects, and this is summarized in the next section.

II. EFFECTIVENESS

This section summarizes available information on the instructional effectiveness of alternative media. It is drawn entirely from a recent paper on 'The effectiveness of alternative instructional media: A survey' that I coauthored with Patrick Suppes and Stuart Wells (1974); this paper will be donoted JSW.

Traditional Instruction (JSW, pp. 26 - 27)

"In concluding this survey on the effectiveness of traditional classroom instruction, it seems reason- able to conclude that few variables consistently make a difference in student performance; the 16

1/ See the following: "The UNESCO Educational Simulation Model," Reports and Papers in the Social Sciences, No. 29, UNESCO, 1974; Ta Ngoc Chau, Population Growth and Costs of Education in Developing Countries, Inter- national Institute for Educational Planning, Paris, 1972; L. Goreaux, "A Model of secondary education in Ivory Coast," The World Bank, forth- coming. For surveys of some of these and related models, see Mathematical Models for the Education Sector: A Survey, OECD, 1973, or M. Malita and C. Zidaroiu, Modele Mathematice ale Sistemului Educational, Editura Didactica si Pedagogica, Bucharest, 1972.

2/ The author is presently involved with empirical studies accompanying the introduction of IR in Nicaragua; when complete, these studies will allow a fuller implementation of the model than has hitherto been possible. - 43 -

variables examined in Table 1 support this general- ization. The student-to-teacher ratio is perhaps the most economically relevant variable under a school system's control, and the 23 recent studies summarized in Table 2 strengthen the conclusions of earlier studies that concluded that the student-to- teacher ratio has little influence on student learn- ing. Exceptions to these general conclusions would be that teacher verbal ability appears important in a high fraction of the instances examined, and that small classes seem to improve the cognitive and affective performance of young children. These con- clusions do not, however, imply that schools make no difference in the cognitive development of their stu- dents; on the contrary, school attendance is clearly important in promoting academic achievement though few studies seem to have examined this issue. What remains to be demonstrate.d is that variations in traditional school inputs are consistently related to variations in school outputs."

Instructional Radio (JSW, pp. 33 - 34)

"Radio has been used extensively for formal class- room instruction in the United States (more in the past than at present) and elsewhere. There exist, however, only a limited number of good evaluations of the effectiveness of IR. These evaluations indi- cate that IR (supplemented with appropriate printed material) can be used to teach most subjects as effectively as a live classroom instructor or ITV. Due to the limited number and scope of good eval- uations now available, and to the potential economic significance of IR for developing countries, much more research--both survey and experimental--is highly desirable."

Instructional Television (JSW, p. 38)

"ITV can teach all grade levels and subject matters about as effectively as traditional instruction, though some evidence indicates that it performs relatively better at lower grade levels. A signi- ficant fraction of teachers and students have ini- tially negative attitudes toward ITV; these nega- tive attitudes tend to lessen, but not necessarily disappear, with time and appropriate administrative behavior. Evaluations that report no significant difference between ITV arnd traditional instruction are usually based on experimental designs that hold almost everything but the medium constant. It is plausible--though not, to out knowledge, experimen- tally verified--that attempts to use the distinctive potential of the television medium would result in more systematic findings of significant differences between ITV and alternative treatment groups."

The above quotes dealt with the effect of media mix on cognitive learning; relatively speaking a good deal is known about these effects. Essentially, if an individual is exposed to instruction, by whatever medium, he will learn, and the amount he learns seems little affected by the medium. Two other questions are important, however, in assessing effectiveness, but less well researched. The first concerns the effect of time or amount of exposure 1/ on learning, and the second concerns the effects of media mix and instructional quality on student drop-out propensity.2/ Only the second of these affects decisions about choice of media, but the available research is insufficient to provide much of a guide.

III. COST OF INSTRUCTIONAL RADIO AND TELEVISION

For a general feeling for the magnitude and relationship between the costs of ITV and IR a study of the General Learning Corporation is useful. They estimated the costs of different instructional media systems for dif- ferent audience sizes and different levels of program production quality, assuming rather extensive production--from 1,000 hours (for a small popula- tion) to 1,600 hours (for a large population)--of instructional materials, distributed through twelve grades of school. Costs per student at the higher ranges of student utilization increase somewhat due to the additional signal distribution costs of broadcasting to a lower density population (there is also an assumed increase in program quality for metropolitan re- gions and larger, but this factor merely slows tha rate of decrease in pro- gram production costs per student and is not the cause of the trend-reversal). Examining these system costs on a per student-hour viewed basis shows that for reasonably large audiences (city and larger), the costs of ITV run three to five times greater than those of IR--ranging from 54 to 10 per student- hour for ITV and from 1.5i to 2.5. per student-hour for IR.

The cost estimates developed in the General Learning Corporation study discussed above were for hypothetical systems and orientated mainly towards the needs and capabilities of a relatively developed nation. The use of these technologies in developing countries, where information on costs that have actually been incurred in available and different types of

1/ Carroll (1963) advanced a model of school learning that places time of exposure in a central role and Wiley (1973) found empirical evidence to support the importance of the time variable.

2/ Beirn, Kinsey, and McGinn (1971) and Brimer and Pauli (1971) have reviewed the research on dropping out and its determinants. media systems would most likely be used (e.g., open-circuit VHF ITV), is perhaps of interest. Furthermore, since there is often a considerable dif- ference between costs in theory and costs in practice, this type of analysis is essential.

Jamison and Klees (in press) examinecl cost case studies for five ITV projects and three IR projects and attempted to put the data on a com- parable basis. Their summary table is reproduced here as Table 1 and their relevant concluding comments are as follows:

1. It is realistic to expect the costs of in- structional televisicin to range from 1.54 to 151 per student per hour, depending most im- portantly on the number of students in the system. The low end of this range can only be reached if close t:o a million students are using the system in a reasonably compact geo- graphical area.

2. It is realistic to expect the costs of in- structional radio to range from 1.3, to 31 or 4, per student per hour, about one fifth as much as instructional television. The high end of-this range can be reached with very small numbers of students (several thousand); the low end might require several hundred thousand. - 6 -

The cost estimates made by Jamison and Klees (except for American Samoa's ITV project and Mexico's IR project which have abnormally low student util- ization rates) seem to compare reasonably well with the estimates made by the General Learning Corporation study.

To place these costs in context, it is worth noting how much the average student to teacher ratio would need to rise in order to keep per student costs constant if a typical technology (costing, say, 2.5i per hour for one hour each school day) were introduced. This depends, of course, on the original class size and teacher's annual wage; assuming an initial class size of 25 and a teacher wage of $750 per year, the student to teacher ratio would need to rise by 4.4 to keep costs constant (Jamison and Klees, Appen- dix). If the teacher wage were $1,500, the student to teacher ratio would need to rise by only 2.03.

IV. IMTLICATIONS FOR POLICY

Elementary Education

Elementary schools in >veloping countries face a well known com- plex of problems including rising unit costs, inadequate student learning, and incomplete coverage of the elementary school age population. The in- structional methods they employ differ very little worldwide: a poorly trained teacher dictates or lectures to a class of 25 to 50 students for 20 to 30 hours per week. The students have only limited access to printed material. What are the implications of continuing with these methods? What are the alternatives?

If these methods continue we can expect rising unit costs result- ing from teacher increases that will occur at about the rate of increase of per capita income. Quality might improve slightly through bet- ter teacher training but this appe,irs somewhat unlikely. If school budgets grow at approximately the rate of national income (and, of course, they can- not long continue to grow at higher rates) then no greater fraction of stu- dents than now will have access to elementary school. Thus, in terms of the model of Figure 2, we could expect to continue to see high dropout and repe- tition rates, and, because of increasing per student costs, no progress in reducing inequality despite potentially major increases in the real alloca- tion to schooling.

Are there alternatives? I think that extensive use of radio for classroom instruction may turn out to be a highly viable alternative. It is effective, as effective as a well-trained classroom teacher (see Section II). It is plausible (but unproved) that good programming could make it substan- tiallv more effective than a good teacher. Its costs can be low. Its use could be paid for by increasing average class size and decreasing the number of hours per week students spend in class. If this were done unit costs could go down and learning up; the ensuing combination of lower repetition - 47 -

rates and large enrollments would dramatically increase system throughput. Use of a broadcast medium has the additional advantage of allowing rapid cur- riculum change in response to social need.

Are there other alternatives? TV is a possibility but there is no evidence that it is more instructionally effective than radio and its cost is apt to be 5 times as great. It will almost, inevitably increase unit costs, and it may do so dramatically (as it has in the Ivory Coast). Thus, for a fixed school budget, it would tend to increase inequality. Another possibility is to raise class sizes and shorten hours of attendance without incurring the cost of simultaneously introducing radio. This would probably improve throughput in the short run by increasing enrollment, but it fails to allow for the very substantial efficiency improvements that could result from reduced wastage. I conclude that heavy utilization of radio is apt to be the best approach to improving equity and efficiency in elementary education. This conclusion is subject, however, to the major caution that systematic use of radio in this way remains to be tried operationally. 1/ Secondary and Higher Education

At present, secondary and higher education are far more costly than elementary, are received primarily by the already relatively well off, and are available only in population centers. The poor and the rural are to a large extent denied access. With an inequality averse utility function the only way to justify expenditure above the elementary level is to have those expenditures be so efficiently spent that the cost of advancing a stu- dent a grade is less than at the elementary level. Continued expenditures on more or less the present methods of providing elementary and secondary education will, then, contribute to continued inequality and selective edu- cation for the better off urban populations.

An alternative to the above could be shaped along the lines just advocated for the elementary level. I think this would have two important disadvantages. First it could not reduce costs sufficiently to have second- ary or higher education justify receiving resources at the cost of elementary education (if we are genuinely inequality averse). Second it could not economically provide education in rural areas if we assume that a substan- tially smaller fraction of students will receive secondary than elementary education. (This is because of inherent economies of scale, up to a point, in running a school with any diversity of course offerings.)

The alternative I would propose for virtually all secondary and higher education is radio-correspondence instruction -- low cost versions of the Open University, if you wish. For reasons of cost, this distance learning should be based on radio rather than television. There is no ques- tion but that students can learn and learn well from these systems (Schramm

1/ The U.S. Agency for Internationial Development is funding a Radio Mathematics Project in Nicaragua that will provide importnat, though limited information on the viability of radio for educational reform. - 48 -

1973, Chapter VI). Costs can be a tenth to a half that of existing systems. Rural coverage is almost as easy as urban. The system could be designed to allow students to work while studying thus making schooling available to able poor students who would otherwise be unable to finance it. Access could fairly quickly be universal, eliminating t"- need for anything other than self-selection for post-elementary education. Adults could easily re- turn to schooling. Curriculum change could adapt easily to changing economic and social needs.

What I would recommend, then, would be:

1. Freeze secondary school and university building construction, teacher training, or teacher hiring. Finance research in other ways than through uni- versity faculty .

2. Create nation-wide open schooling systems based on radio and correspondence. Build this up first in rural areas where the need is greatest even though per student costs will be higher.

While these recommendations probably put the case too strongly, and will be much less applicable for some countries than for others, they seem to me to point clearly in the directions of both greater efficiency and greater equity.

Implications for Donor Agencies

It is clear that the proposals of the two preceding subsections will be politically unacceptable, at least for the time being, to most deci- sion makers in most developing countries. This unacceptability results from some mix of interest group pressure and conviction that continuation of trad- itional methods is the correct way to proceed. Donor agency policy should be oriented toward assisting in every possible way those relatively few deci- sion makers who wish to improve equity and efficiencv by use of low cost media, and toward educating the rest. In particular donor agencies should:

1. Subsidize experimentation with the development and implementation of radio based curriculums at the elementary level, and help insure that sufficient planning is done so that these efforts are cost effective. They should subsidize little else at the elementary level.

2. Subsidize the creation of open learning systems for rural populations at the secondary and higher levels. They should subsidize little else at these levels.

3. Continue existing and initiate new research con- cerning the design and impact of radio based learning systems. - 49 -

REFERENCES

Beirn, R., Kinsey, D., and McGinn, N. Causes and consequences of early schooling learning. Occasional Paper, Harvard University Graduate School of Education, 1971.

Bowles, S. Planning Educational Systems for Economic Growth. Cambridge, Massachusetts: Harvard Universit.y Press, 1969.

Brimer, M.A., and Pauli, L. Wastage in Education: A World Problem. Paris: UNESCO, 1971.

Carroll, J. A model of school learning. Teachers College Record, 1963, 64, 723-33.

General Learning Corporation. Cost Study of Educational Media Systems and Their Equipment Components, vols. I and II. Washington, D.C. ERIC Clearinghouse Document ED 024 286, 1968.

Jamison, D., with Klees, S. The cost of instructional radio and television for developing countries. Instructional Science, in press.

Jamison, D., Suppes, P., and Wells, S. The Effectiveness of alternative instructional media: A survey. Review of , 1974, 44, 1-67.

Schiefelbein, E., and Davis, R.G. Development of Educational Planning Models and Application in the Children School Reform. Lexington, MA.: Lexington Books, D.C. Heath and Co., 1974.

Schramm, W., Coombs, P.H., Kahnert, F., and Lyle, J. The New Media: Memo to Educational Planners. Paris: tUNESCO International Institute for Educational Planning, 1967.

Schramm, W., Coombs, P.H., Kahnert, F., and Lyle, J. New Educational Media in Action: Case Studies for Planners, vols. I, II and III. Paris: UNESCO International Institute for Educational Planning, 1967.

Schultz, T.W., Investment in Human Capital. New York: The Free Press, 1971. See Chapter 7 in particular.

Wiley, J. Another hour, another day: Quantity of School, a Potent Path for Policy. Mimeographed paper, University of Chicago, 1973. - 50 -

Deschool? TrUssng Schools for Education First: The Educational_Impasse in the Developing lWorld

Ronald Dore

The range of human difference

Some people are bright: others are not so bright. Imagination, musical talent, wit, persev'r-lnce, charm, courage, the ability to com- mand, the capacity for dispassionate reasoning, are all qualities unequally distributed in any human population. How much these differ- ences are inborn, how much are due to education, will always remain a matter of disoute. The fact is that wide differences emerge in groups of children who have all received the same education and have come from similar family backgrounds. Indeed it miglht be said that the effect of education is more to make visible inborn differences than to obliterate them. Differences in musical talent or in calculating ability are less noticeable in those human societies where the only instrument is the human voice and the only use of numbers is to count sheep.

To be sure, in hig,,i' differentiated societies with a wide cultural gulf between the f liilies and the schools of different social classes, the effects of education can be such that even ill-endowed members of the upper class can in fact seem brighter and more talented than better-endowed members of the lower classes -- and perform better in many occupations, particularly those requiring self-assurance and the ability to give orders. Cultural differentiation of this magnitude, however, is primarily a feature of European industrial societies. In the developing countries, with which we are concerned in this paper, such cultural differentiation is either far less marked -- as in Africa or else, as in South Asia, Southern Africa or Latin America, institu- tionalised in caste or racial differences, in such an extreme form that cultural factors cannot be said to give a competitive advantage to those from upper strata since there is, in fact, little competition between members of different strata. - 51 -

Coping with the differences

The facts of human difference and the patterns of hereditary transmission involved in them, represent one of the most intractable and most dismaying sets of facts that any political and social philosophy and any set of social arrangements had to deal with. For an egalitarian, there is in principle no illogicality in demanding an equality of rights, a basic eauality of dignity for all human beings while acknowledging diiferences in capacities. But one would feel on firmer ground if one did not have to make such acknowledgement-- vide the generous indignation with which egalitarians seek to dismiss all evidence of differences in average genetic endowments between population groups (either class groups or racial groups), as if to acknowledge the existence of such differences would be to undermine the demand for equal rights and equal respect.

These differences have always been awkward for non-egalitarian hereditary status societies, :oo. All societies admire some of these qualities which are unequally distributed -- whether it be intelligence, musical talent, physical beauCy, or aggressiveness. It may happen that these valued qualities are possessed by individuals of low-born status not marked out for honour. Their absence in the high-born may be equally conspicuous: every upper class produces dunderheads who make inefficient rulers and military commanders. If such incongruences between hereditary status and the deservingness of honour become too glaring, people might begin to question the social order.

There are ways of stopping this, however. Pomp and circumstance can cover a lot of deficiencies in performance. Such a divinity can be made to hedge a king that common people can touch the hem of his garment without ever noticing his clay feet.

A second way many status societies have dealt with the problem is by education. The lower classes contain many men of superior talents, but if you confine the opportunity to learn Latin tags to those of high birth, you can effectively choke off any danger that such upstarts might develop pretentions to be statesmen. If you can at the same time send merchants' children to schools which teach them to be better merchants, and peasants' children to schools which teach them to be better -- more diligent, loyEal and obedient -- peasants, you have gone a long way towards solving your problems.

The coming of industrialization

That is what schools and, used to be for. They were about education and training; they existed to give people the knowledge and the attitudes suitable for the positions in society they were (anyway) to occupy. As for the att:itudes, they rubbed off more or less without effort. As for the knowledge, the motive for gaining - 52 -

it lay in the prospect that the pupil was going to use the knowledge that he gained, or would need it for his self-respect.

In the early industrialising socie-.ies things changed in the late 19th and early 20th centuries. New occupations requiring new knowledge were constantly being created. In a less routine, constantly changing society, government and administration required more new decisions in new situations. Inefficiency became more glaring; knowl- edge requirements escalated beyond the capacity of the less well-endowed of the hereditary upper classes to make themselves minimally competent. Class barriers became more fluid; first because lowly people found ways of making more money than those who had simply inherited their top positions, later because some of them who were well-endowed with native talent acquired the knowl.edge which gave them an undeniable claim to middle and top positions in society. Nations in competition with each other began to accelerate this process because their governments saw a need to "mobilise the nation's talents": and at the same time, egeli- tarianism increased the pressure for equality of opportunity.

Hence the pressure to rationalize the process whereby men were matched with jobs. In Britain, the utilitarians made access, first to the managerial ranks of the East India Company, and eventually of the home administration, dependent on schooling, and competitive examination.

And so, slowly, very slowly, but inexorably, the schools and universities changed. They no longer were there to educate people for the positions to which it had pleased God to call them. They were there to sort people out, to give them different kinds of training according to their talents, to grade them and qualify them for positions their claim to which depended on those very qualifications themselves. New motives were thereby harnessed to the learning process. Children learned not just to acquire knowledge which they would need to use iTh their preordained positions, but to acquire knowledge by which they could gain positions -- through qualifications which certified, on the basis of increasingly formalised examinations what knowledge they had acquired. The schools' qualifying functions came to overshadow their educating functions.

The late-developing countries

In most of the contemporary developing societies schools started that way. Modern educational systems were built on the model of the by now increasingly qualification-oriented schools of the early industrialisers. They were built to staff the embryo modern employee sector of their economies by the same qualification-dependent mechanisms as had been developed in the advanced countries. From the very beginning getting -- or more often failing to get - qualifications was what the schools were all about -- except in a very few eliLe schools whose children were assured of top positions and whose teachers successfully transplanted the educational traditions of older European societies, almost the only thing the schools were about.

The scope and intensity of the selection process involved has varied between societies. In the more stratified societies the chance to qualify depended very much on status in the traditional society. Brahmins' and Hacendados' children found it easier to get a university qualification than low--caste or peasant children. Selection was mostly negative -- those children of the older upper status group who were naturally less well-educated might fail to gain the qualifications which guaranteed a smooth passage into the top positions of the modern sector (though some of them were still smart enough to transfer landed wealth, into commercial and industrial wealth and to manage the transition in another way).

In the less stratified societies, such as those of Africa, the school system is more meritocratic. A much larger proportion of those who get to primary school have had relatively equal chances of proceeding to secondary, and thence of passing through subsequent ability filters to the universities. Even in the more stratified societies, too, egalitarian pressures have gradually widened the base of the school system and incrEased the opportunities for the able to be creamed off.

Unintended consequences

Equality of opportunity is deemed an excellent thing. Merito- cracy, for all its 1984-ish overtones, is generally thought to be at least better than aristocracy. To be sure there are some, like the authors of the Faure Report (.), who consider the view that "it is in society's interest to select its most capable members for performing difficult or responsible tasks" to be a "narrow conception of human capacities and of the relationship between the individual and society" which "can and must -- and, at: any rate, will -- be superseded". But still, they hold, not everyone can yet afford such visions. This "narrow conception" still 'has its validity in countries where urgent needs for trained executives in the economy and administration lead to a meritocratic process of sele!ction".

It is not, however, t:he narrowness of the ideals underlying the educational-credential-selection system which gives pause for thought in the developing countries. There is little disposition to

(1) UNESCO, Learning to be, ].973, p. 26. question it on ultra-egalitarian grounds. There is, though, an increasing realisation that it has unintended consequences of a dis- turbing kind. Those consequences are, to be sure, similar to those the system entails in rich countries, but, in societies with a relatively thin wage-and-salary mode: . sector, they are enormously magnified in degree. Let us list then.

1. First, the desire to move up in society is widespread, the demand for education is strong; schools are a relatively cheap form of capital investment. Hence the production of qualified men and women outstrips the increase in the number of jobs for which they qualified. Adjustments take place eventually. Employers used to taking secondary school boys as bank clerks are offered B.A.s at the same price. They take them. Gradually the B.A.s drive the secondary school boys out of the banks. A degree becomes a necessary qualification for bank clerks. This does not lessen the pressure to get qualifications. If you need a B.A. to become a bus conductor the pressure to press on for higlher qualifications grows rather than diminishes. (And the numbers who start courses hopefully and finish them as frustrated drop-outs steadily increase, too.) Many develop- ing countries are already reaching the stage where ten years' schooling are necessary for any "job' -- any opportunity for wage/salary employ- ment of relative stability in the modern sector, manual or non-manual, skilled or unskilled.

2. As a matter of the greatest concern, people watch the qualifica- tion/job market relation closely, but adjustments in expectations take time. Even when ten years of schooling have become the norm for any kind of "job", some poeple still manage to get "good" jobs as clerks and skilled craftsmen -- enough to keep alive the idea that those with ten years schooling are still now, as indeed they were ten years ago, entitled to a good job, and enough, consequently, to leave those who do not get the good jobs disaopointed, aggrieved, and with a painfully diminished sense of their own qorth. This lag in the process of lowering sights is particularly great at one crucial point -- when any given level of education ceases to qualifv for any kind of modern sector "job". It is easier for people to accept the fact that the ten years of schooling which once qualified for an office desk now qualifies only for the factory bench, than to accept that there are now not even enough places at the factory bench for those with ten years schooling, and that many who leave school at that level can only resign themselves to the farming or the fishing of their ancestors -- perhaps in already overcrowded farms and fishing grounds. Already many developing societies have more than half of each age group entering the labour market with enough schooling to feel entitled to a "job" as an employee -- and only enough new slots in the wage sector of the economy to absorb less than a quarter of them. 3. People begin to doubt the rationale of the qualifying system. By the process described above a B.A. can become essential to become a bank clerk for reasons totally unrelated to the connection between what bank clerks do and what B.A.s learn. The same irrelevance can arise as a result of professional groups using brute collective strength to upgrade the qualifications needed to enter their profes- sions -- in order to support their claims for higher wages and salaries.

4. Irrelevance results also from the divorce between the schools and the rest of life, the absence of any effective countervailing power to offset natural tendencies to bookish ritualism in school and university curricula. An engineer learns a lot for examination repro- duction. It is not necessarily what he needs to know to be a good engineer.

5. These doubts about the practical relevance of qualifications spill over to the system of remuneration. When there is a neat hierarchial correlation between qualification, job and salary, the- system justifies itself. When, however, the difference in qualifica- tion between a civil servant at 1,000 quants a year and a bank clerk at 500, is the few marks difference between a good B.A. and a poor B.A., the logic of the system becomes less compelling -- particularly in ex-colonies where the legacy of expatriate salary scales is a very steep structure of income differentials, institutionalised and protected by collective bargaining erosion by market forces.

6. A not so often noticed consequence is the effect on the schools and on the process of attitude formulation. Simplifying some- what (and concentrating on primary/secondary selection, though the secondary/tertiary transition is no different) the chain of causation is:

The steeper income differentials between jobs, And the more rigidly the qualification requirements of jobs are fixed, And the more miserable unemployment makes the alternatives to getting qualifications, Then, The stronger the incentive of pupils to get qualified

And, And,

The more this is the dominant The stronger parents' pressure for reason why they enter schools, more schools and for equality of opportunity, And, And,

The more they ask of each The greater the number of primary proffered piece of knowledge, schools equipped to prepare "will this help me in the exam?" chil -en for secondary education,

The more they go through their The greater the competition school life without thought of between primary schools to get the use to which their knowledge their children into secondary might be put, schools,

The more a school's success is measured by this standard

The greater the emphasis in the school curriculum on those sub- jects (especially maths and language) which show the greatest variation in performance and hence are favoured as the most discriminating tests,

The greater the emphasis within those subjects on teaching for examination success -- on learn- ing to remember rather than learning to understand,

And, And,

The more the qualification- The greater the concentration of orientation of pupils is teachers' attention on the bright reinforced boys who have a chance of making it.

The end result? On the bright boys, a "model pupil" shrivelling of the soul, a passive acceptance of the authority of Jovian examiners which not unnaturally produces the cautious official careful above all to avoid making mistakes, a ritual. st who joylessly learns only because it is in the syllabus and who will eventually joylessly work only because it is in his job specification. On the less bright boys, a sense of failure; little pride in having become literate and numerate, because by the values of the school learning in itself counted for nothing when it did not qualify. Perhaps they also acquire a few other snippets of knowledge -- the principles of the lever, for example, so efficiently pre-packaged for examination reproduction, so firmly belonging to the arcane world of scholarship that no child would - 57 -

ever imagine it could have anything to do with the well-beam in Iiis back-yard.

Why the backwash is worse in developing countries.

A caricature? Perhaps. But not one without a good deal of truth. The "backwash effect" of examinations on patterns of learning and its generally anti-educational effect, is a matter of great concern in the rich countries. Those backwash effects are infinitely more serious in developing countries for reasons already hinted at but worlh listing systematically.

(i) because the rewards are so much greater. In rich countries secondary school may offer, say, a 15-20 percent increase in lifetime earnings and a modest enhancement of security and prestige status. In the typical developing country not only are salaries likely to be more than doubled; it is a matter of being in the corporate world of the twentieth century -- the world of careers, security, urban living -- or being totally excluded from that world, left -- as many see it -- to rot in the overcrowded inanity of rural life.

(ii) because schools belong to that "modern sector", purveying a knowledge and attitude content remote from the context of village experience. And the greater the gap between the culture of the school and the culture of the home and the more remote school work is from the child's daily experience, the more easily it becomes a mere ritual, a merely instru- mentalised means of getting marks.

(iii) because the modern sectors of developing countries tend to be more completely bureaucratised, placing greater importance on educational qualifications, than the economies of the advanced countries. Britain and the U.S. still provide many opportunities for mid-career mobility and advancement by work performance; late developers tend to have a much higher proportion of administered careers entered by virtue of educational credentials.

(iv) because developing countries are poorer and their schools less well equipped. Schools which can afford laboratories and libraries have a better chance of awakening pupils' interest, of developing discovery methods of learning, than schools in poor countries which cannot afford anything but chalk and talk. (v) because of the difference in educational traditions, countries where pedagogical traditions date back to pre-industrial times before educational certificates acquired bread and butter value find it easier to maintain the fictiotL that education is about moral and intellectual up ift and enrichment, than countries whose schools had selection/credentialling functions right from the very beginning of the educational system.

Teaching and selection: compatible objectives?

Is it absolutely necessary that a system with such dreadful consequences should be perpetuated?

Schools in all modern societies do two things. They try to change people's capacities, attitudes, skills, in ways thought to be for the better. And they effectively decide which, among each age cohort of child, will eventually receive the positions of power and wealth and prestige in society which everybody covets. If the second, the selection function gets so badly in the way of the first, the teaching function -- so much more so in poor than in rich societies -- should one not try to do s,-nething about it? Should one not seek for alternative means of performing the (inevitably necessary) selection function, ways which do not involve the school, or if so not in a manner which has such devastating consequences for the teaching function, i.e. for the business of education proper.

No one at present seems to be looking for such alternatives. The educational world echoes to the apocalyptic voices of the de-schoolers who want to abolish schools altogether -- as if somehow or other the business of deciding who gets what jobs will take care of itself. Reformers and traditionalists alike, within the educational world, conspire to ignore -he selection function of schools and to talk as if schools were only about changing people -- improving them according to the traditionalists, clamping the walls of the prison house around their free spirits according to the reformers.

One can see why educators should want to exaggerate the importance of their role -- why they should want to believe that they mould people rather than merely sort them. What is less understandable is why they should have been aided and abetted in maintaining this illusion by the only other body of professionals who have been influential in determining educational policies.

I refer to economists. - 59 -

The economics of education

A couple of decades ago the economists moved into the field of education. Manpower planners sought to predict the demand for different types of qualifications so that schools could be built in time to meet those demands. Rate of return analysis sought to compare the costs of educational investment with the benefits to individuals and to society.

Underlying these intellectual exercises was the observation of a set of little-disputed facts, interpreted by one mammoth assumption. The facts were:

If one ranks qualifications according to the years usually required to get them, other things being equal, in all societies the hiigher the qualification the higher the salary.

If an employer can get for the same wage two people of different qualification levels he tends (within limits set by such things as the fear of having bored and rebellious workers on his hands) to choose the one with higher qualifications.

Many people do calculate the cost to themselves in effort and money of getting extra qualifications against the gains likely to accrue to them in higher earnings.

The assumptions were:

(a) These habits persist because employing agencies are interested in the performance of jobs, and they find that selecting by qualification level does in fact work; it seems to select the best performers.

(b) It does in fact work because by getting extra education and a higher qualification a man's capacities to perform are improved.

Assumption (b) rounds out the investment view. Many rate-of- return analysts would be prepared to admit that there is an element of monopoly profit in many professional or administrative salaries, but take the monopoly element away and what is left is return on investment. The input by the individual of effort and money is like the input of labour and hedge-plants and drain-pipes into improving land. The education certified by a qualification is a real capital asset like the improvement of land. The extra earnings are a return to that capital like the returns to land improvement. And there is no obvious reason, either, why private costs and benefits and social costs and benefits should not be equated. But there is an alternative explanation which could equally fit the observed facts. It has recently become known as "the screening hypothesis". Employers' prejudices in favour of those with higher qualifications may be confirmed by subsequent performance because the better qualified were naturally brighter. In a situation of great equality of opportunity when every,-. seeks to get as far up the educational ladder as he can, the opportunities to climb are rationed by tests of scholastic achievement. Achievement tests measure how much a man has learned -- which is largely a function of his intelligence and his capacity for sustained persevering effort within an accepted organisational framework. And it is precisely these capacities -- measured by, but not created by, his schooling, which make him a more satisfactory job performer. The investment analogy thus falls down. The effort the individual puts into getting qualified is only the land-owner's expense in getting a government certificate of soil quality out of a Gogolesque bureaucracy, or in paying a farmer to grow an experimental crop to show what the land can do. The returns are not the earnings of capital, but a form of differential rent.

This alternative explanation of the mechanism helps to settle the awkward doubts entertained about thie relevance of qualifications. If they only measure native capacities, relevance hardly matters. Wlhy should it be surprising that people who have got a first class degree through the brilliance of their capacity to compose Greek hexameters (in England) or to remember and manipu- late legal codes (in Japan or Argentina) would eventually (despite their slower start) turn out to be no worse at managing the economy than those who got their first by mastery of the thought of J.M. Keynes?

Let us not oversell the idea. In , in medicine, in agriculture and natural science, and even in the social sciences, the actual knowledge taught in qualifying courses obviously has a good deal to do with subsequent job performance. But still, for later reference, be it remembered that the academic achievement tests which qualify for admission to these professional courses can still be seen primarily as proxy tests for native intelligence and diligence. And there are other ways of imparting this knowledge than through pre-career courses intended both to select as well as to train.

Nor can one ignore the non-cognitive effects of schooling. In the course of learning at the university to compose Greek hexa- meters or to manipulate legal codes the future elite also -- and, it may be argued, more importantly -- become socialised into the upper class culture of their society. They acquire the airs and graces which at once symbolise and reinforce eliteness; they gain an inner certainty and self-assurance which makes it easier to do those things - 61 -

like giving effective orders or coolly taking big decisions on inadequat7 evidence, which one is required to do in top positions in society. It is not obvious though, why this process of socialising people for their work roles in their late teens is better carried on in a schooling context rather than a work context.

One would not wish to assert, either, that even in a cognitive sense the investment mechanism does not work at all. Even if education is seen as the mere planting of an experimental crop to test soil fertility, farmers do, after all, have to clear the land first. Without going into the metaphysics of what is intelligence, let us assume that the testers are not all that far wrong when they suggest that: (a) the bundle of capacities measured by I.O. tests is highly relevant to job performance; and that, (b) although the extent to which non-genetic environmental factors account for variance in performances on these tests varies with the range of variation in family/cultural backgrounds in a society and with the nature of the test, in few studies does the figure rise above 40 percent.2/

1/ Rate of return analysts, recognizing the threat from the screen- ing hypothesis, have shown considerable interest in adopting this thesis of the importance of non-cognitive socialisation as a second line of defence. It still, unlike the screening hypothesis, assumes that what goes on in schools is important, preserves the investment analogy and hence keeps them in business, (see Mark Blaug, 'he correlation between education and earnings: what does it signify!' Higher Education (l,i, Winter 1972), and Education and the employment problem in developing countries, ILO Geneva, 1973. The notion is also congenial to radical economists who stress the complementary functions of other than elite schools which train the masses to a suitably mindless docility, as the mechanism whereby education serves to perpetuate the power structure. The attrac- tion of this view is, therefore, at its maximum for those radical economist who are also addicted to neo-classical rate-of-return calculations. l 2/ See Peter Mittler, The study of twins, 1971. C. Jencks et. al. Inequality, 1972. Appendix A. - 62 -

In the case of qualities not normally covered by the I.Q. test bundle -- the capacity for persistence, for cooperative activity in an organisation framework -- there may be an even higher element of learning involved; though one may question whether more than ten years of such learning is necessary for tite required habits to be deeply ingrained. For some jobs other qualities are needed, such as initiative and creativity. Alas, these are qualities which most schools seem to be better at killing than developing; the more so,the more qualification-oriented they get.

So what? Possible alternatives

If one accepts these views, certain prospects are opened up. Is it really necessary to pump Greek hexameters into a man for sixteen years in order to test his capacity to learn to write pithy diplomatic telegrams? Can one not devise diagnostic tests for such capacities as intelligence, persistence, tact and sense of style which can be applied at an earlier age? Is there not a better way of organising occupational selection?

There is. It is hopeless to expect any advanced industrial country to adopt it except in the unlikely event of wholesale revolu- tion. There might, however, be a slightly better chance in a develop- ing country where the wage/salary sector is still small and mostly in the hands of the government, where institutions are newer and more flexible, and where the problem of educated unemployment is becoming rapidly more acute. The outlines are roughly as follows.

1. Let everyone have, as soon as it can be afforded, nine to ten years of general education -- to learn basic arid numeracy, to learn those things about his nation's history and the working of its institutions that all citizens need to know, to learn the sort of elementary psychology that mothers need to know and the elementary canons of ethics and of aesthetic enjoyment that all human beings need to know.

2. Get selection for first jobs by and large over with by 16 or 17, not only for manual jobs, but also for the professional occupations whlich now recruit graduates. Civil service administrators would start off as clerks and executive officers, teachers as pupil teachers, future engineers as craftsmen and trainee technicians, doctors as medical assistants, and those in the ability ranges (in some developing countries the less able sixty or even seventy percent) whom the economy gives no real alternative but to be farmers and fishermen would discover the fact before they invested several years of heartache in trying to escape that fate. - 63 -

3. Recruiting doctors from medical assistants, university teachers from school teachers, engineers from technicians, etc., is not simply to say: revert to 18th century European forms of professional . There will, of course, be a good deal more learning on the job, in say, engineering and medicine, but tertiary institutions will continue to exist in much their present form. But they would provide in-service education and training, chiefly, but not exclusively, to men and women in their early twenties -- the future administrators drawn from the ranks of civil service clerks, the future engineers chosen from the ranks of technicians -- men and women whose greater maturity, greater sense of reality and of relevance, and greater sense of purpose might do a great deal to revitalise universities. (How many university teachers now recall with nostalgia the golden age of 1946-9 when the universities were filled with demobilised soldiers?) There is no reason why all this tertiary level schooling should be "training" of a vocationally-oriented kind. Let it be possible, without much financial sacrifice (but not, any longer, with any prospect of financial gain) for anybody who has academic leanings, but especially those who are in the kind of job which makes their sanity and wisdom and human sympathy vital to the health of the society, to spend time studying and reflecting in a university on the nature of man and society, and art and work and the physical universe and the purpose of human life. Nor is there any reason why this learning and reflecting experience has to be con- centrated in conventional 3 or 4 year courses concentrated in the early stages of a career. It could be recurrent: a year or two at age 20; another year 10 or 15 years later, etc.

4. The financing of such a system would be complex, but the total cost to society should everywhere be less than the cost of tertiary education today; the greater opportunity cost in production foregone of having more mature students studying would probably be amply compensated for by a dim:;nished demand for general tertiary education if graduate certificates were no longer the passport to jobs but merely a ritual celebration of achievement and sentimental symbol of a bond between teacher and student (or fellow-learners). The detailed mechanisms of the system would also need various refine- ments to ensure: (a) that there is no favouritism in the in-service selection for opportunities for training/promotion, (b) that in-service training does not bond people, (c) that there is enough leeway in the system to provide spill-over into self-employed entrepreneurship, the academic profession, etc., and (d) that talents which require continuous cultivation, mature early and spoil early -- like the highest mathematical or musical talent -- are not wasted. It is not impossible to devise such refinements.

5. Wherever selection is necessary:

-- in selecting for occupations at ages 16/17, -- in later selection for opportunities for training/ promotion, - 64 -

-- (in societies which cannot yet afford nine years' education for all and must make, say, Grade VI to IX into a selective middle school) for selection within the school system;

avoid using achievement tests as far as is humanly possible, in order to escape the backwash effect of such tests.

The alternative selection device has to fulfill three criteria.

(a) It should not be something that a large proportion of classroom time can be spent preparing for.

(b) It should result in an eventual matching of jobs to men which is at least no worse than results from the present use of educational certificates.

(c) It should be seen by the people of the society as a le iti- mate way of putting people in the jobs everyone would prefer to have.

A lottery is an obvious means of fulfilling the first objective 100 percent (unless the days were spent in prayer, as one can imagine they might be in some societies). As for the other two objectives, there might be some societies where it would be accepted as legitimate, but we might end up with rather less able surgeons and bus drivers. Partial use of lotteries can help to reduce backwash, however, as both the Tokyo Metropolitan government and the South Korean government have demonstrated in the last ten years in their forms of selection for high school and middle school respectively,-/

Something which approaches a lottery system in effect is a quota system to modify the effects of achievement tests. This has been tried in Yorkshire for selection from junior school to academic secondary, and appears to be common in post-cultural revolution in China -- for precisely the reasons suggested here. A junior school is told not -- as under the achievement test system -- all children who pass with more than 85 percent or all who come in the top 200, will be accepted; but, your best pupils will be accepted. (Though to avoid favouritism, etc., the selection is best done not by the junior school itself but by the secondary school or by some other outside agency.) This (a) makes selection unpleasantly intesawmAse and teachers are therefore prompted not to draw atention to it, and (b) they lose their present motive for concentrating on examination- preparation since there is no question of the number of children pass- ing the selection examination being taken as a measurement of their

1/ See ECAFE, Economic Survey 1973, Part I, Chapter IV. - 65 -

performance. The quota system has the advantage that it can also be used to equalize opportunities as between educationally deprived rural areas and better endowed urban areas.

The favourite candidate to replace achievement tests is, of course, the aptitude test -- intelligence tests, tests of persistence, tests of cooperativeness, tests for creativity, divergent thinking, etc. Aptitude testing, is to be sure, still an underdeveloped art even in the rich countries and adapting what is known to different cultures would be costly. Where they have been tried (in Japan in the 1960's for university entrance specifically to reduce the backwash effect of achievement tests) they have usually foundered for several reasons:

(a) Because their advocates have usually tried to claim that they do better than achievement tests in getting round pegs into round holes -- whereas from the point of view adopted here, all one has to prove is that they are not so much worse in this regard as to cancel out their one immense advantage -- that they cannot, for more than a couple of weeks, be effectively coached for.

(b) Because they reduce the advantages of middle-class children whose parents can buy the coaching which boosts their achievement test performance but not their performance on intelligance tests -- and middle-class parents are articulate. In other words because it does make for greater equality of opportunity.

(c) For the more genuinely important reason that to adopt aptitude tests, to make all the good things in life depend on the luck of being born bright, rather than on achievement is to devalue the effort that goes into achievement. Apart from reducing the legitimacy of the resulting selection (given the sense of justice prevailing in most -- not perhaps all -- societies), this symbolic demotion of effort as a value may have long-term repercussions on society. (Though there is no reason why it should not be compensated for by propagating the notion that those who are lucky enough to be born bright and get good jobs have an extra responsibility to society to use their talents fully and conscientiously.)

One possible means of countering the last argument against aptitude tests is to devise an intermediate kind of selection device. For example, countries which already have complex administrative struc- ture for conducting national examinations could convert them to teaching- and-testing operations. One week of the school year could be given over to the business of selection. During that week the testing authority - 66 -

would offer an intensive course by radio and correspondence in some subject, not announced beforehand, which does not normally figure in the school curriculum. It might be symbolic logic, astronomy, geology, or circus management, something which can be made intelligible to beginners, which requires some memorization, some capacity for abstraction and reasoning. An examination at the end of the week could then be used as a test of learning ability -- a mini-achievement test without backwash effects on the curriculum.

The advantages

What would be the advantage of substituting some variant of aptitude tests for the present system of achievement test selection.

1. It may even be that this would be a better means of occupa- tional selection -- of getting round and square pegs into their respective holes. It is highly likely that it would not be worse than achievement tests. Even if it were worse, the change would be justified for the other advantages itemised below.

2. It provides a means of breaking through the escalating spiral of ritualistic qualifications which in the developing countries threatens very soon to produce, if not B.A. bus conductors, at least A-level doorkeepers.

3. It reduces the quantum of private pain -- experienced, for instance, by all doorkeepers who invested their twelve years of education hoping to be clerks but ended up, after agonizing months of frustration, lowering their sights to door-keeping.

4. The door-keepers might have a chance of actually getting twelve years of education -- not just twelve years of ritualised, quali- fying, expectation-raising, schooling. The point of relying on aptitude tests is primarily to devalue achievement tests, in order to liberate the school curriculum from the incubus of examinations. If learning were not just a means to a status carrying an extra 50 quants a month, the distinction in the second between the "serious" subjects like maths, and language, and the unserious subjects like wood work and citizenship and farming, would tend to disappear. At present, all attempts to vocationalize, or pre-vocationalize, the primary or junior secondary curriculum seem to fail. Why? Because under the regime of achievement test selection one of two things happens when, say, woodworking is introduced into the curriculum. Either it does not count in selection for higher education, in which case it is an unserious subject which bright boys and their teachers will smile at with contempt. Or else it is made to count, in which case it is elaborated in order to make it as usefully discriminating a test as maths or foreign languages for selecting the top 10 percent. The syllabus is invested with all kinds of arcane lore about the history of carpentry and the generae of coniferous trees which effectively removes the subject into safe and - 67 -

bookish isolation from the real world. If the constraints involved in achievement tests are removed, schooling can be about education -- giving people knowledge and skills to use or to enjoy.

5. Aptitude tests permit a better approach to equality of opportunity than achievement tests. They reduce the differential advan- tage of those well taught in good schools.

6. If job selection is based on qualities explicitly accepted as being largely genetically determined, the justice of income differentials is called into question. It may be possible to argue that some differentials are functionally necessary to motivate people to acquire new skills in the course of their careers, but not that they represent a "just" reward for effort invested.

Of all forms of income, rent has always been the most morally vulnerable to attack from egalitarian ideas. This counts as a further advantage for those like myself with a bias in favour of equality. Moreover, if there were greater equality of income; then any form of selection would be less painful (less would be at stake, not only in cash but also in social prestige which is affected by cash).

7. The ultimate effects on ideology would possibly be wider. Systems of remuneration and incentives are gradually, in most societies, moving away from the basic capitalist market principle of which, as Marx said, the piecework system in industry was the quintessential expression. Work organisations are fumbling around for notions of "social purpose", "involvement", "organizational commitment" as alterna- tive answers to "why work?" If jobs are seen to be allocated according to the luck of one's native talents so that effort is in fact devalued as an end in itself, and if, as is likely, society develops the alterna- tive justification of effort as a social duty (see the argument above: not noblesse oblige, but bonne chance oblige), then the contemporary search for a new and more stable post-capitalist work ethnic will be furthered.

The defenders of the status quo

If the arguments presented here have some validity, why is it that the wisdom of the ages has produced, in practically every country in the world, the kinds of qualifying institutions based on the invest- ment assumption, which we have now? I have tried to show elsewherel/ how our present system of pre7career qualifications resulted from a variety of factors including the growth of self-interested pro- fessional associations in the advanced industrial societies and thence was unthinkingly and irrelevantly exported to the developing world.

1/ "The Late Development Effects", in H.D. Evers (ed) Modernisation in Southeast Asia, Oxford University Press, 1973. - 68 -

But one needs to explain not just wlhy the system developed but what sustains it. My characterisation of income differentials as rent is not original. Balogh and Streeten made the point -- admittedly rather more tentatively -- years ago.l/ Some rate-of-return analysts have quietly adopted a 40 per cent discount ractor representing the amount of variance in earnings which might be attributed to native talents rather than schooling. But it is only in the last year or so that the "screening hypothesis" has been argued by economists with any great conviction and that the orthodox have been obliged to rally to the defense of the traditional investment view.2/ Why? Because, I would suggest the screening hypothesis is a nasty one; and the conclusions which can be drawn from it, as I have tried to spell them out here, are equally disturbing to many groups of people.

First, it is particularly nasty for teachers. It is fine to be the creators and moulders of talents -- even, perhaps, the creators of a capital investment. Who wants to be relegated to the role of mere testers of innate talent?

Moreover, the alternative system outlined above would be a serious threat to teachers. For the first time in their lives they would be required to teach. Instead of simply going through an examina- tion routine, coasting along on the tide of their pupils' materialistic motives -- "learn this or you will never be a good conscientious, self- respecting engineer," "learn this so that you can experience the pleasure of mastering a difficult set of equations, so that your pleasure in the next novel you read will be that much more discriminating."

Secondly, it is rather unpleasant for everybody else, too. Using aptitude tests sharpens, rather than glosses over, those differences in genetic endowments, the distressing nature of which was dwelt on in the early paragraphs of this essay. They also devalue effort. Failure in an achievement test tells a man, "Sorry, chum. You haven't tried hard enough. Have another shot next year." In the long run the "cooling out" process of several annual repetitions with

1/ T. Balogh and P.P. Streeten, "The Co-efficient of Ignorance," Bulletin of the Oxford University Institute of Economics and Statistics, May 1963, pp. 99-107.

2/ See K. Arrow, "Higher Education as a Filter," in K.G. Lumsden, ed.. Efficiency in Universities: The Le Paz Papers, Amsterdam, Elsevier, forthcoming. P. Wiles, "The certificate-not-content hypothesis," Higher Education, November 1973. P.J. Taubman and T. Wales, "Hligher education, mental ability and screening," Journal of Politieal Economy, January/February 1973. R. Layard and G. Psacharopoulos, "The screening hypothesis and returns to education," Journal of Political Economv, (forthcoming). - 69 -

gradually diminishing hopes may be much more painful than the sharp surgical verdict of the aptitude test: "Sorry chum; you're not in this class. Horses for courses." But people do not think so, and the generous instincts underlying these sentiments have to be respected. The unpopularity of 11-plus intelligence tests in England is a measure of the strength of those instincts.

Thirdly, the alternative system is especially uncongenial to intellectuals and professionals. There are three kinds of intellec- tuals: nice ones, nasty ones and the vast majority who share both qualities. Nice intellectuals dislike the view put forward here because it sounds arrogant and they feel guilty about that. (For some reason which has to do with where people feel the core of their identity to lie, it seems more arrogant to say, "I have had the luck to be born intellectually superior," than to,say, "I have had the luck to be born in the middle class," or "I have- had the luck to be more capable of the sustained drudgery of swotting.") Nasty intellectuals dislike it because, as suggested above, it challenges the legitimacy of the high incomes they enjoy. The vast majority in between dislike it for both reasons.

Economists, finally, dislike the idea for special reasons. Differential rent always was an unpopular, messy kind of concept. How can we do beautifully refined calculations of rates of return if the inputs are not investments at all, but given, like the quality of the soil? How can one go on~equating private and social costs And benefits, when the man "investing" effort to earn a qualification is clearly mistaken as to the nature of the process in which he is engaged? And how can one cope with the wretched refinements of product differen- tiation which become necessary when people start denying that a year of schooling is a year of schooling is a year of schooling, and insist on differentiating sharply between a year spent being educated and a year spent in ritualistic qua:Lification?

Those who are at once economists, teachers and intellectuals can thus be seen to have multiple motives for upholding the status quo and the accepted educational ideology. They bear not a little responsibility for its entrenchment. Perhaps as they observe the growing misery associated in the developing world with what is usually called "educated unemployment" but should be called "qualified unemploy- ment," some among them will begin to have doubts. - 70 -

The Impact of Input-Output Educational Research on Developing Countries

Ernesto Schiefelbein

Jencks' recent book on "Inequality" has been widely commented in the mass media. Its impact is on two audiences, the first from the academic world and able to appreciate the worth of the data and qualifications on the conclusions; the second related to policy makers and public opinion. The impact on the second audience may be important if it affects appro- uriations for educational systems. The public has heard Jencks say that schools do not really make much difference and the implication is: it is not worthwhile to put much money into education. Wlith regard to the first audience, there is less concern as the critics of professional journals do not usually modify public opinion.

The evidence presented in the research may alter the present equilibrium of the American educational system with respect to multiple moral, political, economic and esthetic commitments. Research is fast becoming a source of power in the political arena. Any change in the educational policies of the USA, however, will be the result of a care- ful assessment of many points of view. Developed countries have built- in forces that avoid weakly supported decisions, For example, at least two books are already circulating about this subject.

Unfortunately, there is no similar built-in, efficient defense mechanism in the developing world and for that reason I would like to explore some implications of Jencks' work for such countries.

Given the scarce number of research scholars working in developing countries this paper is addressed to policy makers.

1. Essential Issues

It is well known that cross sectional analysis on data gathered at one point in time may prove to be misleading. The ideal, longitudinal experimentation, is however, practically nonexistent in education (Cohen, 1973). In addition to the weaknesses attributable to the cross sectional analysis used by Jencks, et. al, it is necessary to mention that no more than one third of the variance in educational achievement is explained by the variables measured in the data used in the study. This fact may be interpreted as low reliability in measurements or exclusion of relevant variables. Previous research suggests that the ability of teachers is difficult to measure. Further, "the shadow curriculum" has yet to be illuminated. The non-explained variance reminds us the sad fact that more relevant variables have to be measured in future studies. - 71 -

In spite of these remarks, the data and the statistical methods used in the Jencks' report seem to be the best model actually available. New techniques, like spectral analysis, are being tested but we will have to wait for some time before benefiting from their development. Accepting the method as the only valid alternative, my comments, therefore, will deal with some of the research results presented by Jencks. My main interest will be on the educational production function, because the economic effects of education have been widely studied by other economists. U

Jencks' analysis is based on a very special definition of success: getting a job that pays as much as others get. It is not enough for him to observe that education bears upon occupations or production, because he is interested in equality. His definition, however, seems of little relevance in cases where the main goal is to reach certain minimal levels of life. The question in developing countries would be if education helps to surmount -the initial barriers of development. The conclusions so forcefully presented by Jencks, even if they were valid for developed countries, may prove to be misleading when discussing educational development in the Third World. There is a real danger of doing so because: 1) in developing countries an important percentage of the children have no schooling at all and 2) research shows that some school variables do affect educational achievement.

Developing countries are cuasi-dual societies, with one group living in a modern sector and the other almost marginal group. Education is one of the available means to overcome the barriers to enter in the small modern group. We don't know which is the minimum educational level necessary to abandon the marginal group, but it is substantially lower than the lowest level of educational attainment considered in Jencks studies. Jencks' conclusions should be examined in the context of the educational levels of those subjects that were competing for a given job in USA. Thus, in the American situation it is meaningless to make comparisons between illiterates and people that have graduated from secondary education. In USA secondary education may be a threshold that opens a whole array of entry occupations, but in developing countries those reaching secondary are members of an exclusive elite, sometimes even inside the modern group. Differences in level of attainment of college education, therefore, may have little explanatory power with respect to American occupation differentials, because college is beyond the threshold. Basic education, however, may be a key factor toward a minimal level of democracy in developing countries with a much lower threshold. Anyway, the effect of schooling in the absolute level of knowledge seems to be beyond any doubt. i/ Jencks is interested in the effects at the individual level, while my interest is in the design of national educational policies that may improve both the per capita income and equality levels Variables that may prove to be significant at the aggregate level may be irrelevant at the individual level and vice versa. - 72 -

Research carried out in Brazil, Colombia, Chile, Puerto Rico and Venezuela (Wolff, 1971; Drysdale, 1972; Schiefelbein and Farrell, 1973a; Carnoy, 1971; Garcia et al., 1973) shows that school variables make a subsTantial contribution to explain the total variance in educational achievement. The school universe, differs markedly, however, in the amount of resources and facilities per student. This is not the case in the universe studied by Coleman and Jencks where students of low SES sometimes had better input per student ratios than high SES students. 2/ Moynihan and Mosteller (1972) had already suggested that below a threshold point schools may have a significant effect when they wrote: "It is tempting to state that the conventional wisdom proved wrong on both counts (that schools are very different and that these differences influence achievement) but this would not be quite fair. Had there been the large differences in the school facilities of the races that had been assumed, such differences might have proved of great consequence."1

The possible existence of input thresholds in the educational pro- duction function have also received some support from the three volumes of the "International Studies in Evaluation" completed by the International Association for the Evaluation of Educational Achievement (IEA). Analyses of these reports done by Coleman (1973), Platt (1973), Thorndike (1973) and Vaizey (1973), call attention to systematic differences between developed and developing countries. Thorndike suggests several alternative or complementary explanations for the differences: "A third explanation, which does not exclude the previous one as a contributory factor, is that the same indicator may have genuinely different significance in different cultures." It is possible to believe that people in different cultures may learn in a different way or that the interaction of variables are different. In any case we should do some research about how people learn across cultures. Data is beginning to be available to start some relevant comparisons, but it was not available five years ago.

got surprisingly, Jencks' conclusions for developed countries are not widely accepted. (American Association of School Administrators, 1973.) This research suggests for example that schools have no in- fluence at all but Coleman found in the IEA study that "for all three subjects (literature, reading, science), the total effect of home background is considerably greater than the total direct effect of school variables. The overall average is .42 for home background, but only .26 for school at age 14. For population I, the 10 year-olds, school variables are higher relative to home background (.22 to .35 for the overall averages), but because of measurement differences for home background at the two ages,

2/ However research carried out in Chile at the end of the secondary education (where most of the students of the lowest SES do not reach) is consistent with the data of the Coleman Report. (Schiefelbein et al., 1973c). Thorndike (1973) have also reported similar differences in the IEA study as well as called attention to the fact "the dynamics of prediction across countries is rather different from the dynamics across individuals." - 73 -

this might not be a true differencae". Colemans' comparison showed a much higher effect of school variables to home background than have been reported before and more evidence will be necessary to build a consistent educational policy. However, the fact that school variables have little effect in the variance of educational achieve- ments does not eliminate the effect of schooling in the absolute level of achievement.

But our concern goes beyond researchers questioning the conclusions for developed countries. Even if they were correct in the developed world, the evidence presented above shows that Jencks' conclusions may not be valid for developing countries. But in the past we have seen that hypotheses or suggestions based on partial evidence have been adlopted as dogma by international agencies and globe-trotter experts. The type of medical research, resources devoted to free university education, primary , rural grade schools or the 30-student class size are a few examples of pseudo-scientific educational policies currently encouraged. Jencks' work, however, may force us to look at the educational policies with a new perpective. I will explore some of the implications of the existence of threshold points in the effects of relevant school variables. Before, however, I will examine other less important issues.

2. Less Important Issues

Available research shows that early malnutrition may cause serious brain damage (Monckeberg, 1973). Malnutrition problems in developing countries may affect up to 20 or 30% of the population. In extreme cases persons with low IQs may not be able to participate in the labor force; in most cases malnutrition means early drop- out from the educational system. The nutrition variable, however, is not studied by Jencks.

Other important variables that influence student achievement in developing countries have also not been studied by Jencks. 3/ Trans- portation -t-o''school, absenteeism, health problems (apart from mal- ,idtrition), heating,languages or dialects, costs absorbed by the family, teacher changes from c:L'ass to class and school to school, and teachers' attitudes are a few examples of relevant variables that may invalidate conclusions obtained through research in developed countries. In other cases Jencks considered for example, the 'tquality of textbooks" measured by their cost (instead of measuring the availability of textbooks) because every student in USA has'ainiinimum number of textbooks for him.

3/ Variables in developing countries may b'e constants in the USA, for example, all children have textbooks and most have good tr?ansportation to schools. - 74 -

The importance of education in explaining the differences in income has been widely studied by many economists. Although Jencks, dealing with individuals, obtained results contrary to the previous research, I believe it is not necessary to discuss the issue in this brief paper. In average the higher educated (with similar SES background) earn more than the less educated. I would like to mention, besides, that partial research in Latin America shows that education has a significant impact on income and occupation (Myers, 1972).

The third problem that might be stimulated by "Inequality"t deals with the future dependency of the Third World. Many intellectuals, supporting Illich's proposal of deschooling society may interpret Jencks' results as a further demonstration of Illich's thesis. Most of them are committed to shape a better world and are willing to spend time and efforts to implement this idea. 14/ The underdeveloped countries offer them an excellent place where to try controversial experiments that are almost impossible to mount in developed countries (Cohen, 1973). It is always possible to get some financial resources to convince private or public officials in developing countries that it is good to try new ideas. Besides, there are always foreign experts trying to design new projects. A twisted use of Jencks' conclusions may help some of them in preparing a convincing proposal.

3. Economic and Educational Implications

If we accept the existence of a threshold point for the effects of each one of the main inputs (or for given sets of inputs) of the educational system, we should try to use resources not to increase facilities beyond that point, but to expand the number of students served by the system. Thus we can raise the productivity of resources used in the educational system.

The policy design for certain inputs should not present many uncertainties. 5/ The size of the class group, for example, may be substantially increased with no impact at all in the student achievement, although it will provoke the resistance of teachers unions. Results of research related to class size reviewed by Jencks are consistent with the IEA report and with studies in Brasil,

4/ Alice Rivlin (1973) has examined the attempts to use research findings to support a given position and to ignore the counter evidence. She suggests that this "tcommitted" position (posture) may be open to discussion by the advocates of the other side. Unfortunately, this may be difficult to carry out in developing countries.

5/ If we accept the validity of cross sectional data used in the production function studies. - 75 -

Chile, Puerto Rico and Venezuela. The increment in the size of class group from 35 to 45 students means that total enrollment may be increased by one third with no cost at all. In many countries this simple measure would mean that no students willing to study would remain out of the system. The increment in class size may go up to 60 students with the provision of minimal facilities.

According to research in Chile and lenezuela (Schiefelbein and Farrell, 1973b; Ministerio de Educacion, 1970) the time of the day be in the school (in the morning, in the afternoon or the whole day) or the number of hours (beyond 6 hours) does not make a signifi- cant difference in student achievement. These facts are consistent with the idea of a threshold point and with Jencks' claim that slight changes in American educational standards does not affect outcomes. Bht for developing countries the previous findings mean that most schools (where there is a demand for places) may be used in double shifts. 6/ This policy may be complemented with a policy favoring student effort in sciences homework (Platt, 1973).

Available research in Chile and Brasil shows that textbooks have a considerable impact on quality of education. These results however, are the opposite of those presented by Jencks. The explanation may be that "effectst' of textbooks show only up to the moment when each student has easy access to texts in the key subjects of the curriculum. Given that in developing countries few students have textbooks, a cheap way to increase standards may be to provide textbooks and to motivate the teachers to use them.

Resources to match the cost of the textbooks may come from changes in the teacher salary policies. Salaries are usually related to teachers' degrees and experience. According to research, however, teachers' degrees and experience, beyond a threshold point, seem to have little impact on student achievement. Let us assume that teachers with 15 years of training generate similar (or slightly better) results than teachers with 12 years of training; then if the teachers with 15 years of training demand or get salaries twice as high as the salary of the teachers with 12 years of traing, it may be rational to hire in the future mainly the latter.

These are a few examples of policies that may be thoroughly examined for developing countries. The above suggestions are supported by actual research in developing countries and by Jencks

6/ The year round use of schools has already been implemented in several countries. The experience in Bahia, (Brasil) is positive. Carnoy (1971) have used as a variable "the actual number of hours per day a student attended classes in a month," and found significant correlations in 20% of the regressions, some of them, however, were negative. - 76 -

when he states that developed countries might improve the efficiency of their educational systems: ?'If schools use their resources differently, however, additional resources might conceivably have larger payoffs" (p. 97). In his appraisal of the IEA study, Vaizey (1973) also states that there is room for a more efficient and productive use of resources than that which currently prevails.

4. -Imp-icat-ions for Research Priorities

Educational research in developing countries is scarce. But there is no way of testing the above proposed policies except by experimentation. In each case some extreme alternatives may be tried out and evaluated.

The fact that attending 5 rather than 6 hours daily (in a five-day week) does not make much difference in student achievement may lead to study a lower threshold point. It also may be useful to explore the possibility of a five-hours-four-times-a-week schedule (in a six-day-a-week schedule for the school) in order to serve a third group (50% more) with the same physical and teaching facilities, but with a 20% increment in teaching salaries for the addition of a sixth working day in the week (30 hours a week for each teacher).

The threshold point inay be, however, five hours a day three times a week (in a six-day school schedule), thus the system might attend twice as many students as is usuaUy done today with similar resources. Even if a slight reduction in quality results from this alternative it may pay to absorb practically all the existing demand for school places in most developing countries.

Other educational means should be explored at the same time. The success detected among children from low SES families, who watched Sesame Street ix an index of what can be achieved through ETV. Fortunately two or three evaluation projects on the effects of Plaza Sesamo (the Spanish version of Sesame Street) may give us some guidelines in the near future.

A detailed comparison of results obtained for the USA by Jencks, with data from Chile or Venezuela may be worthwhile. It would be interesting to make a comparison of the different weights of identical variables in explaining educational achievement in countries with such a gap in development. This comparison may help to begin to understand systematic differences in the educational development of countries with different initial situations. Furthermore, it would be possible to avoid in the near future misleading influences in educational policy decisions.

Jencks' conclusions like those of all in developed societies may be excellent in themselves, but my concern is with the tendency - 77 -

to use them uncritically and to apply in situations for which they are not valid. I have tried not to discuss the results themselves as much as to examine their implication in the context of developing countries where the results might be used. - 78 -

REFERENCES

1. American Association of School Administrators, "Christopher Jencks in Perspective," 1973.

2. Carnoy, Martin, "Un enfoque de sistemas para evaluar la educacion, ilustrado con datos de Puerto Rico," Vol. I, No. 3, Mexico, 1971. Revista del Centro de Estudios Educativos.

3. Cohen, David, "Social' Experiments with Schools: What has been Learned," paper prepared for a conference sponsored by The Brookings Institution. Harvard, August 1973.

4. Coleman, James, "Effects of School on Learning: The IEA Findings," paper presented at the Harvard-IEA Conference, November 1973. 5. Drysdale, Robert, :'Factores determinantes de la desercion escolar en Colombia," Revista del Centro de Estudios Educativos, Vol. II, No. 3, Mexico, 1972,

6. Garcia, Castaneda, de Leon, and Schiefelbein, "Tele-visiorn y rendimiento escolar," Ministerio de Educacion de Venezuela, Comite de Teleducacion, mimeo, 1973.

7. Jencks, Christopher, "Inequality, A Reassessment of the Effect of Family and Schooling in America," Basic Books Inc., 1972.

8. Ministerio de Educacion, 'Conocimientos generales de los educandos. Primera Farte: la evaluacion metodologica para la medicion del rendimiento del sistema educativo," Caracas, 1970.

9. Monckeberg, Fernando, "La desnutricion en el nilo y sus consecuencias" Revista del Centro de Estudios Educativos, Vol. III, No. 1, Mexico, 1973.

10. Mosteller, and Moynihan, eds., "On Equality of Educational Opportunity,' New York, Random House, 1972.

11. Myers, Robert, "Logro academico, antecedentes sociales y recluta- miento Ocupacional," Revista del Centro de Estudios Educativos, Vol. III, No. 1, Mexico, 1973.

12. Platt, William, "Policy-Mlaking and International Studies in ," paper presented at the Harvard-TEA Conference, November, 1973.

13. Rivlin, Alice, "Forensic Social Science," Harvard Educational Review, Vol. 43, No. 1, February 1973. - 79 -

14. Schiefelbein, L. and Farrell, T.i., "Las Relaciones entre.los factores y los resultados del proceso' educativo," Ministerio de Educacion, Santiago de Chile, 1973.

15. Schiefelbein, L. and Farrell, T.R., "Exnanding the Scone of Educational Planning: The experiefice of Chile," paper presented at the meeting of the International Society of Educational Planners, Mexico City, June 1973.

16. Schiefelbein, Latorre, de Andraca, Jarry, "Factores del rendimiento escolar en el nivel medio," PIIE, mimeo, Santiago, 1973.

17. Thorndike, Robert, "The Relation of School Achievements to Differences in the Backgrounds of Children," paper presented at the Harvard- IEA Conference, November, 1973.

18. Vaizey, John, "The Implications of the IEA Studies for Educational Planning with Respect to Organization and Resource," paper presented at the Harvard-IEA Conference, November, 1973.

19. Wolff, Laurence, "The Use of Information for Improvement of Educational Planning in Rio Grande do Sul, Brazil," Thesis, unpublished, Harvard, 1971. - 60 -

RMP0ATEU R IS C0ILENT TS

I. izWith respect to method it was recognized that the emphasis given by Jencks in analyzing the explanatory power of education (vis-a-vis other variables in the explanation of income inequality) was not very useful for policy concluisions relevant tc cost-benefit analysis (Carnoy, Selowsky). For policy purposes the coefficient of education becomes more important.

The possible generalization of Jencks results (that education does not explain much of the inequality of income) to developiLng countries was discussed (Blaug). It was agreed that it was a result specific to the U.S. without direct implications for LGC's.

The need to find an empirical method to evaluate the contri- bution of education was raised. Different views were presented:

(a) Blaug's emphasis was on why entrepreneurs are willing to pay more for educated individuals.- In other words, even if we could isolate the effect of education on earnings - from other variables colinear to education levels - the reason of why entrepreneurs were willing to pay more was a central issue in analyzing the effect of education.

(b) Simmons stressed the probable importance of non-cognitive skills in determining employers' decision to pay more for more educated labor.

(c) Dore suggested the need of studying the relationship educa- tion/productivity at a very micro level (firm level) and with different indices of productivity.

(d) Carnoy responded that the impact of education on productivity would be underestimated if one does such analysis with occupations. The reason is that higher levels of education have the effect of changing the occupational status of individuals.

II. The policy implications of Jamison and Schiefelbein's paper were discussed, particularly changes in the efficiency of use of the resources of the educational system.

The following issues were discussed:

(1) The effect ot class size. According to Jamison the effect of class size on the quality of schooling has been found in almost all studies.

(2) The effect of hours per day attended, as well as the time of the day at which children go to school was discussed.

(3) Schiefelbein suggested that lack of textbooks was an important variable, at least in the case of Chile. - 81 -

Given that almost all the results of the impact of school inputs on educational achievements were made in the U.S., the question arose of its relevance for developing countries.

Simmons asked, (a) to what extent LDC had to undertake long- run research concerning "educational production functions," (b) to what extent they could already take some corrective measures in the light of the U.S. results.

The relevance of educational production functions results in the U.S. was discussed further. It was agreed that the range of obser- vation in the variables in LDC are extremely different to the U.S. In other words, the coefficient of school inputs could vary as a function of the range of the variables.

Janison summarized his research and compared it with some of Jencks' findings. According to him,-the low explanatory power of school inputs in Jencks' study is due to the use of cross-section data (instead of time series) as well as the use of badly measured variables. One example is the behavior of teachers in the classroom. According to him, this is an important variable usually not measured in this kind of research.

Mr. M. Selowsky - 82 -

Education and &ployment

Mark Blaug l/

1. The Quantitators Versus the Qualitators

The literature on the role of education in the development process reveals a thinly veiled conflict bet.ween those who emphasize quantity and those who emphasize quality. Both the manpower-requirements and the rate-of-return approach are fundamentally preoccupied with quantitative decisions, treating the quality of education as a datum for their purposes. Neither approach denies the importance of qualitative considerations; it is simply that qualitative reform is regarded as irrelevant unless first the right decisions are made about the respective scales of primary, secondary and higher education. Such convictions are sometimes reinforced by the view that qualitative reforms fall within the purview of a different sort of expert: the educationist. Those who emphasize the content of education, on the other hand. andl they are freouently teachers, educational administrators, cr in a wore "educationists," are apt to dismiss the numbers game as pointless. So great is the political pressure for education, they would argue, that the notion of harnessing quantitative decisions to any economic rationale is rejected as naive. The professional role of educati mists is respected only in the sphere of teacher training, curriculum reform and examinations; it is these qualitative quest,' cns that alone afford scope for rationality of the apolitical type. Here too there are plenty of other arguments that are used to sUpport the emphasis on quality: a schclastic, fact-memorizing, exarrin.ati.on-based educational system of a given size has an impact on economic activ-ity (not to mention 115 social aind political climate) that is quite different from that of a practic ', vocation-oriented, innovative educational system cf' exactly the same size, irrespective of the merits and defects of either system. call the l'r'.uantita- It is .iorth noting Uha'. 4;hi - coGrifict between ,,'-at. we might mDp] oyment c f 'eCUalitEtourl-'eth,- is th.inly mopered o-er in the four ILO World Reports that have so far been published. All of them without exception broadly concur with the findings of rate-of-return analysis that higher education is over-expanded relative to primary education in virtual-ly al1 developing countries and that resources ought now! to be diverted from the higher to the lower levels of education. In the Columbia report, this conclusion derives in fact from a manpower forecast based on initernational comparisons, but the upshot is the same. In the Ceylon, Kenya and Iran reports, it derives from a general "feel" for the situation, although in the case of Iran and Sri Lanka it is supported by some manpower forecasting exercises. Nevertheless, none of the reports emphasizes such judgements about the optimuin scale of the educational pyramid; instead, all of them concentrate on reforms of the content

1/ The following paper is based on my recent monograph, Education and the Emjrloyment Problem in Devebping Countries, ILO, Geneva, 1973, to which the reader is directed for evidence to back up some of the assertions made below. - 83 -

of education. It is not clear whether it was thought to be politically inexpedient to highlight the the need to cut back higher education, or whether the lack of emphasis on quantitative decisions reflected a deeply held conviction that the content of education in these countries represents a more profound bottleneck to economic development than any possible misallocation of resources among levels of education. At any rate, the reforms proposed in the reports are concerned largely with what actually goes on in classrooms and in out-of-school education in all its varieties.

This is not to say that the mission reports are exclusively qualitative. A hallmark of the literature on educational reform written by educationists is the complete neglect of the labour market. If parents and students insist on an academic education leading to white-collar employment, if they refuse to accept an agricultural bias in the curriculum of rural schools, it is only because they are ill-informed - and the traditional answer of educationists to that problem is vocational counselling. Unfortunately, vocational counseling, which ought to be informed by the best possible data about labour market prospects, rarely is; and in any case, the possibility that parents and students may be right, given the circumstances which confront them, is rarely admitted. What distinguishes the mission reports from the educationist literature is that reform of the labour market is given at least as much weight as reform of the educational system - and quite rightly too. It is pointless to call for restriction of upper secondary and higher education so long as the labour market renders further education privately profitable. It is fruitless to propose changes in pay scales without at the same time attempting to alter the hiring practices of the public sector, which profoundly influences, if it does not dominate, the hiring practices of private industry.

But the consequences of the relative neglect of quantitative con- siderations in the mission reports is that all the weight in altering the private returns to student investment in education is thrown on the side of earnings and none of the side of costs. Very little is said about th.e fee structure cf education, particularly at the higher levels, or about grants, scholarships and loans related directly to parental income. This is the more surporising in the light of the emphasis on income distribution in the mission reports. Surely, the pattern of finance of education, considering that extra education typica4y leads to higer earnings, is not a negligible aspect of the problem of income distribution? Again, the subject may have been avoided because it w.as deemed to be politically unpopular. If so, an important dimension of the role of education in the employment problem has been lost sight of. The qualitative reforms recommended by the mission reports are focused, in one way or the other, on the examination syndrome: the tendency to subvert the entire educational system to the selection of students for progress up the pyramid. Instead of patiently working to reshape both curricula and examinations so as to certify the competence of students for the unpredictable wiorld of work, rather thar the perfectly - 84 - predictable world of further education, the mission reports opt for aptitude tests as a method of attacking the certification function of schools. In addition, they want to interpose a long gap of work experience between secondary and higher education, while concentrating far more resources on the ample provision of out-of-school education.

I doubt the value of these proposals for reforming examinations principally on thie grounds that aptitude testing raises at least as many difficulties as school examinations. I agree that it is not what is taught in schools that is important but rather how schooling affects children's attitudes and values. In saying this, we at least avoid the mistake of believing that all will be well if only we imparted vocational rather than academic knowledge. I agree, therefore, that the mere testing of cognitive knowledge is largely irrelevant to the economic value of education - which is to say that the economic value of education has m.ore to do with effective behaviour of graduates than with their knowledge of facts and concepts. But there is no proper substitute for examinations that will in fact measure the relevant consequences. Lf the aim of assessment is to test the capacity to reason, to digest information and to analyse it in terms of abstract concepts, the appropriate screening device is indistinguishable from what we think of as a really good examination. If, instead, the aim is to test attitudes, behaviour and underlying values, there are no aptitude tests that will measure these attributes unambiguously. We may want to submit children to McClelland's 'n-achievement test" in the effort to maximize the tendency of education to foster so-called 'developmental values," but no uEeful purpose is served by calling thi 5an aptitude test. In short, the authors of the mission reports frequently wirite as if psychometrics were an uncomplicated field instead of the morass it realsly is.

Much more serious is the failure to come to grips with the implications of their proposals for initial teacher training, not to mention in-service training as related to the structure of teachers' salaries. The quality of teachers, the kind of people attracted to teaching and the way they are taught to teach is at the heart of all problems of educational quality, and no reform of education is worth its salt if it does not address itself to this range of questions.

2. Research Experimentation

At the same time, it would be fcolish to pretend that we know exactly what would happen if we ruralized and vocationalized the curriculum, if we abolished examinations, if we selected students by geographical and social quotas, if we adopted the principle of "working gaps" in post-compulsory education, if we concentrated resources on non-formal rather than formal education, if we compressed earnings differentials by fiat, if we recruited civil servants in total ignorance of their paper qualifications, or at any rate promoted them on merit instead of on age and educational attainments, if we raised fees to cover the total costs of instruction and geared scholarships strictly to parental - 85 -

income, if we replaced all grants and scholarships by loans at the stage of higher education - in short, if we adopted any and all of the proposals that have been mooted at one time or another by edu- cational reformers. It is easy to call for more research to throw light on these questions, but how shall we carry out research in the absence of evidence about the effects of these untried ideas? To be sure, there is some evidence around the world that would be relevant, as in the case of vocationalized curricula or out-of-school programmes. But for most of these proposals there is no evidence whatsoever, because so far they have nowhere been put into practice.

It follows that experiments are needed. The educational authorities of the less developed countries must be persuaded that we still do not know how to make education "relevant" to employment opportunities and that in fact we shall never know until someone conducts controlled field experiments. Alas, pilot schemes are fraught with difficulties: to select a school or a district or a group of students for an educational experiments invites criticism either on grounds of dis- crimination or on grounds of special treatment; besides, the im- possibility of holding other things constant always makes it difficult to evaluate pilot schemes. Nevertheless, without experiments, educational reform necessarily turns into a hit-and-miss affair.

Evaluation implies criteria of judgement, and so long as there is no conflict between output objectives and employment objectives, the appropriate criteria are rates of return to edcuational investment - that is, systematic comparisons of earnings per unit of costs for those who have benefited from the experiments with earnings per unit of costs for those who have not. But if labour market fails to perform its traditional functions, output and employment objectives may well clash, and in this case rate-of-return signals w7ill prove misleading. We must then invoke cost-effectiveness analysis, or what some people prefer to call "output budgeting," as a more general technique for evaluating projects. It is perfectly feasible to select a particular project (say, the "working gap" between secondary and higher education) and to monitor a cohort of students who have passed through such a scheme, measuring: (1) their subsequent admission patterns to higher education; (2) their performance in higher education; and (3) their ultimate employment record for, say, the first three or four years of their working lives. We will probably get different answers from the three measures, and so must decide why we wanted the "working gap" in the first place. To reduce the pressure on higher education? To strengthen the motivation of studen-ts once they are in universities? To improve the match between choice of subject and choice of occupation? Or perhaps all three? No decision on policy is possible unless these multiple objectives are somehow scaled in order of importance. If the decision is made, the scale of priorities is there in any case;but cost-effectiveness analysis can help to make it explicit. The very attempt to quantify the extent to which the scheme achieves different objectives serves to delineate the objectives themselves, and it is here that cost-effectiveness analysis makes its principal contribution to - 86 - educational planning. If one thing has become clear in the course of the World Employment Programme, it is that the employment problem has as many dimensions as economic development itself. It is difficult to see what would solve the "employment problem" because of the goal of maximizing employment; or, if you like, income-earning opportunities, is imprecisely formulated. It is after all only a means to other goals, and so policies that achieve it in the short run may fail to achieve it in the long run and vice versa.

3. Some Shibboleths

I will draw my essential argument together by way of a commentary on some widely held shibboleths about the role of education in the "employment problem;" in short, a critique of the platitudes that are heard in every country whenever men sit down around conference tables to discuss the problems of less developed countries. a. Education increased the volume of Employment

This is certainly true in the short run, if what is meant is that education itself is a labour-intensive industry, and it may be true in the long run, if what is meant is that education is a type of social investment because it renders people more productive. But in what way is it more productive? By teaching children manual or mechanical skills they could not have acquired elsewhere? True for certain specific professions, but surely not true in general? By imparting "developmental" values and attitudes? But can schools do this; and, if so, how do they do it? Unless we know that, we cannot be sure that more education would impart more of these appropriate values. Perhaps schools only sort out children in terms of their native drives and aptitudes, in which case there may be better and cheaper sorting machines than the educational system. In other words, the proposition is likely to be misleading unless the relevant time period is specified and unless the sense in which education is said to be "investment" is explained.

A different interpretation of this proposition depends on the idea that more educated people save more and spend less, and when they do spend they tend to consume labour-intensive goods and services. There may well be a relationship between education and individual savinr; however, it is not really inadequate saving that explains the poverty of poor countries but rather the type of investment outlets into which the savings are transferred. As for the pattern of consumption spending, it has yet to be empirically demonstrated that its factor intensity is well defined in terms of the educational attainments of consuMers. b. Education works to eliminate poverty

Over the long run, this reduces to the first shibboleth. It may be taken in another sense, however. Education acts to reduce the - 87 -

birth rate, directly via the education of women and indirectly via an increase in the period for which children are dependent on their parents. And the lower the rate of population growth, the higher the level of incom,e per head. Purthermore, education is a necessary complemPent to sanitation and nutrition programmes, and these work directly to eliminate the consequences of poverty. The trouble with all such arguments is that they do not lead anywhere: it is not enough to know that education is causally related to family limitation; we need to know the magnitude of the causal effect if we are to choose between more education and other ways of restricting population growth.

Still another interpretation of the proposition before us is that educ24izn is a necessary input into certain activities for which there is an effective demand but which cannot nowJ be produced at all; in other words, there are manpower shortages and these shortages inhibit the growvth of output. No doubt there are still examples around the world which are capable of supportiing this extremely simple reason for expanding education, but they are rapidly becoming harder and harder to find. Even some of the remaining examples are spurious: if there is a shortage of plumbers that holds back the construction industry, it is usually because the scarcity of plumbers has not been allowed to raise the wages of plumbers; or because one can become a plumber only by serving a five-year apprenticeship; or because labour- saving plumbing equipment cannot be imported owing to foreign exchange control; or because there really is Ino shortage of plumbers as such but only of good plumbers, a problemn which cannot be solved simply by training more plumbers. c. Education causes unemployment

Taken at its fact value, this is clearly wrong. wJhat is meant, however, is that there is something about education that makes people unemployable: it raises their aspirations beyond all hopes of satisfying them; it gives them the wrong skills or the wrong attitudes. There is clearly something in this argument, but the point about aspirations is really true of the entire development process. Imagine if there were no education. Surely then the complaint would be that these countries are poor because theydo not want to better themselves? Is there an educational syatem anywhere that raises career expectations just so much but not a jot more than can be satisfied by prospective job opportunities?

If the skills and attitudes now fostered by educational systems are wrong, what would be the right skills and attitudes? Vocational skilis, of course, and attitudes of self-reliance. But what is e vocational sKili? One that can be turn-d dircctlv into the crcHuction of saleable output? Surely, this is better learnt on the job? Is it instead a foundation which expedites on-thp-job learning? If so, that is what schools aim to do. If it is too snecific, it will not serve the needs of every - 88 -

student; and if it is general, why cal1 it a vocational skill? As for self-reliance, we have yet to learn how to instill it, although ad- mittedly traditional education makes a poor job of it.

d. Education converts underemployment into open unemployment

Traditional rural societies share the work to be done among members of the fanily, each member working perhaps less than he would like. Education causes people to leave these traditional communities and to move into the modern urban sector where the same work will be done by fewer workers, the rest being left unemployed. In that sense, the more highly educated a poor society is, the greater the amount of open unemployment observed in it.

True, and yet too general. Education indeed stimulates the "flight from farming" - not, however, because it is bad eucation but because the same impetus that drives parents to send their children to school sends these same children to seek employment in towns: the awa;^eness of greater earnings in towns and even greater opportunities for part-time employment while continuing the search for a full-time job. Besides, towns in Africa and Asia are poorly described as made up entirely of the modern sector; the intermediate urban sector is not unaccustomed to work-sharing and it also provides ample opportunities for apprenticeship training. Furthermore, it is not just education that converts underemployment into open unemployment but the entire development process. The real problem is that education absorbs resources so that educated unemployment is a more serious economic problem than open unemployment as such; it represents a using-up of resources that might have been devoted to creating employment opportunities. e. Education is simply part of the scramble for a limited supply of top jobs

Employers will always prefer more highly educated people for any job whether or not the higher qualifications are in fact necessary for efficient performance. Hence, students are motivated to acquire extra education in order that they may better compete in the rat race; but their education does not make them more productive and hence has no ultimate consequences,either for total output or for total employment.

We recognize this argument as the so-called "screening hypothesis" or "certificate effect" and cannot stop-to do justice to it here. Suffice it to say that it is unconvincing as a general explanation of why educated people earn more than uneducated ones. Notice, however, that it contradicts proposition c. If education by its irrelevant content renders people unemployable, how is it that em- ployers are "conspicuous consumers" of more educated people? Perhaps it is the government which is the irrational employer in question. Is it that education is relevant to the clerical needs of the civil service but not the profit-maximizing needs of industry? Why then is industry reluctant to convert these badly educated workers by means of labour training? And if it already does so ihy does it prefer - 89 -

people as trainees instead of simply hiring able people as revealed by aptitutde tests, whatever their educational qualifications? But enough said. Proposition e is too extreme to be worth a fu.ll discussion.

f. Public subsidies to further education always result in excess demand for education and hence in excess supply educated manpower

The argument is simply that as the benefits of education accrue almost exclusively to educated individuals themselves in the form of higher salaries, while the costs of education are largely borne by society as a whole, further eduction continues to be a privately profitable investment far beyond the point at which it has ceased to be socially profitable. Moreover, the much greater visibility of the earnings of those who are employed, as against the lack of earnings of those who are not, exaggerates the profitability of more eduction to private individuals and so encourages the demand for education. By implication, the remedy is to shift more of the costs of education to students and parents and to publicize the evidence on the incidence of educated unemployment.

All too true, and yet not the whole story. If the labour market worked smoothly and more or less instantly, it would long ago have adjusted to the excessive demand for education by reducing the earnings differentials between more educated and less educated people to zero. And if the labour market does not work smoothly and works only with long lags, there may be educated unemployment even though education is not heavily subsidized, as witness the case of higher education in the Philippines. Thus, educated unemployment must be attacked both in terms of educational finance and in terms of labour market policies. g. Excessive salary differentials in the interests of the ruling elite are responsible for educated unemployment

Earnings differentials in less developed countries are excessive by international standards: in the United States a doctor earns three times the average income per head, in India he earns 20 tirnes as much, and so on. These differentials were frequently created at the time of the independence of the countries concerned in an effort to attract expatriate personnel, and they have been maintained ever since by highly educated political elites through their control of the public sector and their influence on private firms. Obviously, this creates an insatiable demand for higher education, and we get educated unrmployment simply because at some point tax revenues prove incapable of absorbing even more graduates into the public~ sector.

This argument is clearly modelled on the former British colonies of Tropical Africa, but if suitably amended it has some relevance to Asia as well. It depends critically on what is meant by excessive salary differentials. International comparisons prove nothing except that, as economic theory predicts, a scarcer factor will always receive a relatively higher price: after all educated people are scarcer irn India than in the United States. Nevertheless, there is a clear sense in which earnings differentials associated with education are excessive - 90 -

NOTES ON SCHOOLING AND UNEMPLOYMENT

Martin Carnoy

Ten years ago, industrial country economists were concerned that important bottlenecks to economic growth would occur in non-industrialized countries because they lacked "high and middle level" manpower. Manpower planning was intended as a partial solution to this problem. A scant decade later, however, non-industrialized countries are faced by an apparent "excess" of highly schooled labor; the average level of schooling in the labor force has increased but so has the average level of schooling in the unemployed labor force. Furthermore, unemployment shows no sign of diminishing even though the unemployed - on average - are in theory more adequately prepared to participate in the growth of the economy.

As an example of this problem, Table I shows the growing open unemployment in Latin America between 1950 and 1965. The Organization of American States describes the situation in the following way:

The general employment situation in Latin America as a whole is one of disequalibrium between the population in the mass and the economic structures of the hemisphere. The quickening growth of population in the region, its rapid urbanization, and the high growth rate of the labor force are part of a complex socio-economic situation that may be summarily described as an employment crisis, manifested partly by a relatively high rate of open employment - particularly in urban areas - but also by extensive underemployment and a low rate of parti- cipation. 1/

In Asia, the situation is probably even worse:

The previous industrial development plans of the EAFE countries have not made any sizable impact on the overall employment situation, and the employment opportunities have lagged far behind the growth in the labor force. In some countries, like India, Pakistan and Ceylon, the backlog of unemployed and under-employed at the end of the plan period appeared to be far larger than at the beginning of the plan period - indicating that the new employment oppor- tunities have not kept pace with the growth in the labor force. Such data as are readily available do suggest that the situation on the enployment front is assuming quite serious proportions. In the Republic of Korea, despite all efforts at industriali- zation, the number of unemployed and under-employed persons - 91 -

it in less developed countries; the fact that/is educated unemployment is enough to tell us that there are more educated people looking for work at going wage rates than are vacancies. But the maxim: Reduce differentials; is not by itself very helpful. What keeps the differentials artificially high? Is it government policy? Surely not in all countries because in many of them salaries are dominated private firms? We are not going to make such progress here unless we find out much more than we now know about the hiring practices of both the private and the public sector in less developed countries. Thus, labour market studies ought to be the kernel of the research work of the World HVloyment Programme.

4. A Transitory Problem?

We know that une1ployment in poor countries is at present concentrated among the young and that even among them it is concentrated in the early years of their-working lives. Is this the invariant pattern or can we expect the high rates of unemployment at present observed in the younger age group to become characteristic of the older age groups in time to come? In other words, will it always be largely youth unemployment and hence educated unemployment, simply because in a rapidly growing educational system it is the young who receive the balk of the additional education; or will it gradually rurn into mass unemployment evenly distributed throughout all ages and all levels of education? This is the critical question-for the developing world.

To attempt a decisive answer to the question would be presumptuous. But a stab at an answer would run as follows: if the less developed countries maintain their present growth rates, the problem in the foreseeable future will indeed remain that of unemployment heavily concentrated among those aged 15 to 25. On the other hand, there is no easy remedy in sight for youth unemployment and for educated unemployment. The present tendency of educational systems to grow more quickly at the top rather than at the bottom of the educational ladder must somehow be reversed, and I have argued that this can be achieved only by a re- structured pattern of educational finance combined with deliberate intervention in labour markets. But; to reverse these trends does mean that we shall cure educated unemployment only to create or to aggravate the "school leaver problem." Bat the remedy for the school leaver problem, at least in the short run, lies in the provision of out-of-school education. In the long run, it lies in the slow and patient reform of primary education from within by curriculum reform, examination reform and the improvement of teacher training. It may not be a very exciting prospect for those who hanker for quick results, convinced that there is somewhere a clever idea never previously considered which will solve all our difficulties overnight. But here, as elsewhere, it is "piece- meal social engineering" which I believe will prove to be the method by which we shall eventually solve the problem. - 92 -

Table 1: POPULATION, LABOR FORCE AND EMPLOYMENT IN LATIN AMERICA

1950-1965

1950 1955 1960 1965 Total population (thousands) 151 116 173 104 199 307 229 691 Rate of participation (% of total population) 34.85 34.80 34.70 34.60

Labor force (thousands) 52 661, 60 240 69 160 79 473

Persons employed (thousands) 49 739 56 077 62 866 70 651 Persons unemployed (thousands) 2 925 4 163 6 294 8 822 Rate of unemployment (% of labor force) 5.60 6.90 9.10 11.10

Source: OAS - CIES, op. cit., p. 2 - 93 -

has increased in 1963 to 703,000 and 2,220,000 respectively. Notwithstanding the rapid development of manufacturing indus- tries, the total number of unemployed persons in the Philippines is estimated to have increased from 540,000 in 1959 to 577,000 in 1960, 618,000 in 1961 and 662,000 in 1962. In India, around 5 million at the beginning of the Second Plan period has been estimated to have increased to 9 million during the beginning of Third Plan period and is expected to be of the order of 9-10 million at the beginning of the Fourth Plan period. In other countries like Indonesia, Burma or the Republic of Vietnam where the development plans remained practically inoperative either due to economic and political instability or serious shortage of external and internal resources, the impact of development planning on employment was even less significant. 2/

Already in the early sixties, unemployment among primary sclhool leavers in West Africa was very high, 3/ and after independence, with even greater expansion of schooling, unemployment began to move up into the secondary and university schooled labor force, despite the elite nat,ure of secondary and university schooling. 4/ Non-industrialized economies - especially small industrial-based African economies - cannot expand non- agricultural employment quickly enough to absorb the output of schools. At the same time, those who take schooling are loath to work in agriculture.5/

Unemployment: More Efficient Mechanisms or Structural Change? The most important question to ask is whether large scale unemployment is primarily an inherent part of the capitalist development process or whether primarily inefficiencies in capitalist development produce this unemployment. Unless we can begin to answer this question, solutions to unemployment cannot be proposed. There are persuasive arguments that unemployment is inherent in capitalist development, particularly in industrializing, dependent economies. First, owners and managers of physical capital make the investment decisions in capitalist economies. In dependent, low-income economies, many of these decisions are made by foreigners from the industrial, dominant economies. But foreigners or not, employers prefer to have less labor than more, simply because of the production problems which go along with human relations. Machines do not come late to work, they do not strike, they do not argue than deal with an aggressive labor force, about working conditions. Rather 6 employers would logically prefer to eliminate labor entirely from the plant. /

As long as investment decisions (and these include decisions on the adoption of technology, the choice of product production, and the organization of work) reside in the owners of physical capital, there will - 9h -

always be a tendency to employ less labor than possible with the production functions extant in the given product mix, and the prevailing "market" price of labor. More important, less labor will be employed than is possible with an alternative product mix based on a different set of societal needs. Even those non-industrialized countries which have achieved very rapid growth rates in GNP, like Puerto Rico and Mexico, have done so with very high and undiminished unemployment rates - in the case of Puerto Rico, open unemployment remained at about 12 per cent from 1940-1960 despite massive emigration of rural population to the U.S. Under conditions of dependent capitalist development, then, the prospects of solving the unemployment problem through increasing the economic growth rate are not very promising. The increase in growth rates in such economies probably implies the use of advanced, capital-intensive technology and foreign capital which exacerbate the unemployment problem.

The Distribution of Unemployment

Although unemployment rates will tend to remain high in non- industrialized capitalist countries, even in the face of rapid growth rates, and although this unemployment includes and will continue to include those with high level of schooling, all the evidence we have points to lower rates of unemployment to college educated than to high school or primary educated labor. 7/ Apparently, the demand for more highly schooled labor grows more rapidly than the demand for less schooled labor; employers substitute more schooled for less schooled workers within a falling labor- capital ratio. 8/ Thus, the preference for capital by owners and managers is not limited to physical capital; it also implies hiring people with more schooling over people with less schooling.

Under such conditions, we can hypothesize that unemployment is much more likely to occur among some groups of people than others, and that the elimination of unemployment has distributional consequences.

First, social class background is an important factor determining how much schooling a person gets. If it is the poor who tend to get lower levels of schooling and the rich, higher, unemployment hits the poor harder than the rich. The rate of unemployment is generally lower among the more schooled than the less schooled.

Second, unemployment hits people from different social classes with the same amount of schooling differently. Those from lower social classes are more likely to be unemployed than those from higher social classes even if they take the same number of years of schooling. 9/ Part of this effect is due to the kinds of schools attended by the various social classes: children from wealthier families attend private schools or the better (urban or suburban high cost) public schools and universities, while poorer children attend rural or provincial schools. Employers prefer the - 95 -

former to the latter if they have the choice. Part is also due to less well-developed market connections among poor families. Both of these effects interact with similar effects on average income among those from different social classes but the same amount of schooling.

So far, We have just been discussing "open" unemployment; that is, the part of the labor force that is seeking work but cannot find it. In addition, Eckhaus argues that a large percentage of income differentials between those wiith different levels of schooling in the United States is due to the greater number of hours worked by people with more schooling. 10/ Those who get more schooling also get access to jobs which require (or allow) them to work longer hours but pay them more. People with more schooling therefore not only have a greater chance of finding work, but once they do find work, they have access to jobs which allow them to gain more earnings through more work. This option is not open to those with less schooling except through holding multiple jobs.

I have gone through this unemployment and underemployment structure to underline the class basis of the problem. 11/ Capitalists and managers of capital prefer capital to labor and higher social class to lower social class labor.

Can Schooling Solve Unemployment?

The solutions to unemployment as they are now being discussed by planners, do not seem to take this into account. On the one hand, planners are proposing the use of more labor-intensive technology and the production of goods which use more labor. They argue that alternative forms of technology can be used which are more consistent with the availability of cheap labor in the non-industrial countries. This proposition disregards the entire hierarchy of investment decision-making. The planners assume that technological decisions have, until now, been a matter of fortuitous circumstances; in other words, they assume that the capitalist system can fully employ people, if it can only be made to operate more efficiently.

In this same context, planners and politicians are turning to more "relevant" urban school curricula such as t"vocationalt" education under the assumption that people are unemployed because the schools are not preparing them for jobs available in the urban producing sectors. Attempts are also being made, through curriculum changes, to orient rural schools more toward rural life and work. But again, unless unemployment results from the inefficient workings of an otherwise "sound" system (which can achieve full employment given its present social and economic structure), "major" changes in school curriculum to better "fit" graduates to employers' "needs" will not solve the problem of educated unemployed. This proposed solution incorrectly - 96 -

assurmes that the problem is on the supply side alone; that there is a fundamental "mismatch" between skills provided by schools and the available jobs on the market. There is also the assumption that schools can convince people to want certain kinds of jobs by training them for those jobs. Neither assumption is supported empirically, and shows little understanding of capitalist labor markets.

First, unemployment of school leavers is high in non-industrialized countries because, at the going wage and the technology used by capitalists, there are fewer jobs than people available and capable to do them.

. . . curriculum reform will not alter the current situation, since the causes of under-utilization of manpower have very little to do with what is taught in the schools. Moreover, lower level schooling can nowhere prepare individuals for specific occupations. Indeed, the attempt to do so would vastly increase educational costs and, if anything, reduce the existing flexibility of the system. To my mind, there are more viable strategies that can be pursued, and these hinge on examining what goes on outside the schools rather than what goes on inside them. 12/

Second, motivations of students depend on perceptions of sub- sequent opportunities. These perceptions, in turn, are derived from the realities of the socio-economic environment. British attempts to impose agricultural occupations on Africans through formal schooling during the rmid-19th Century and colonial rule were only partially successful. Africans saw the highest rewards in European-type work, not in agriculture. Today, the nationalist bourgeoisie is the highest status class in capitalist countries. The kind of schooling its children take is the most desirable and most aspired to by other social classes.

Those who criticize the "traditional" nature of . . . demand for "academic"' as opposed to "vocational" education fail to recognize that the strength of academic education has lain precisely in the fact that it is preeminently a vocational education providing access to those occupations with the most prestige and, most important, the highest pay. . . 13/

Our argument is simple: unemployment is hardly a problem of labor's level of schooling or type of schooling. While some improvement may be made at the margin with changes in curriculum or an attempt to channel people into professions or technical preparation for which there appears to be some excess demand, as soon as significant numbers of people are channeled or prepared in this way, they are faced by the same problem that people in oversupplied fields have. If the production decision-makers only want a certain number of workers, making education more relevant is not going to change that desired number. - 9? -

In order to confront unemployment, we must look at the demand for labor in general and the supply of labor in general. The demand for labor in a capitalist economy is a function of how many workers capitalists want to employ. This theoretically is a function of the price of labor and the technology used. However, we have argued that owners of capital always prefer new technology which employs less labor than is employed under the actual labor/capital price ratio and the actual technology. Also, we have argued above, the choice of products to be produced is not determined purely or even predominantly by sovereign consumer demand. Owners of physical capital are oriented toward goods which use more physical capital in their production. Thus, in order to increase the demand for labor associated with a growth output, we must confront the decision-making hierarchy (and therefore the social structure) of an economy. 14/

On the supply side, we can look at the problem in terms of population control. If we decrease-population growth, the number of people looking for work fifteen years hence will be decreased as well. There is no doubt that future unemployment can be reduced to almost zero with popu- lation control in industrialized countries. Indeed, many decades of low population growth rates following genocidal wars have created "shortages" of labor in some Western European economies; "shortages" which were met with the importation of cheap labor from lower income European and North African countries. Ten years from now, the United States may be faced by similar labor scarcity.

Yet, for most countries, conditions on the labor demand side are such that even low population growth rates and rapid increases in the education of the labor force and national product will not reduce present unemployment rates. Again, Puerto Rico, despite its peculiar circumstances as a colony of the United States, serves as an interesting example. The island's net population growth rate between 1940 and 1960, because of emigration of masses of rural poor, was only 1.5 per cent annually. Unemployment did not decrease, although it was probably far below what it would have been had emigration not occurred. Rises in wages, the product mix, and imported capital-intensive technology effectively reduced the absorption of the slowly-growing island labor force intc the incdustrial and service sectors. 15/

In summary, I am convinced that the main thrust of research on and evaluation of unemployment should concentrate on total employment of the labor force. There is no logic or empirical evidence to support the argument that more education in the labor force will create more employment, unless we are talking about turning over production and investment decisions to the workers themselves. In that case, a more highly-schooled labor force mnight be more able to invent labor intensive techniques so that they can hire more workers than a less schooled labor force. But even that position is not strong. - 98 -

To understand how to increase employment, we have to have a fairly accurate picture of production functions for various goods, the alternative technologies for producing those goods, and the alternative kinds of goods that would satisfy general consumer demand. For example, there are a number of alternatives for solving transportation demand. Within each alternative there are alternative technologies of production, and within each technology there are alternative combinations of labor and capital that can produce the good. Since, at each of these three levels, subsidies can alter the capital/labor price ratio (and they do, usually in favor of more intensive use of capital), the price ratio is not necessarily exogenously determined.

But technical alternatives to increased employment have impli- cations for the distribution of output, just as employment rates themselves have implications for distribution. If we choose product mixes and technical methods that increase labor use without average salary reduction, labor will receive a greater share of output than capital. We must take account of these distributional consequences in our overall understanding of how alternative levels of employment can be achieved.

The Effect of Unemployment on the Demand for Schooling

Schooling has little effect on unemployment, but unemployment may have a significant effect on the demand for schooling: paradoxically, a decreased unemployment rate could reduce the demand for schooling by school takers. When unemployment decreases, income foregone increases, since young people are more fully employed.

Lower levels of unemployment also probably raise the incomes of less-skilled people relative to more skilled people, and therefore may reduce the absolute benefits of going to school. The combination of increased income foregone with lower or constant benefits (or even increasing benefits, since income foregone, as a cost of schooling, comes early in the cost-benefit stream) of more schooling, reduces the private rate of return to going to school. If students and their families are at all sensitive to the pay-off to schooling, this could reduce the amount of schooling they want to take.

Thus, the reduction of unemployment tends to offset a trend to demand more and more schooling because of fewer and fewer work opportunities for those who are young and have little schooling. We note in the business cycle in the United States, for example, that applications and even enroll- ments increase during slumps (higher unemployment) and decrease during booms (lower unemployment).

The fact that unemployment has been relatively high during the post-World War II period, however, has insured a constant pressure on the part of young people and their families to expand the college/university - 99 - system. Much higher secular unemployment rates in non-industrialized countries have contributed to even greater pressure for school expansion, particularly at the secondary and university levels (unemployment rates are highest among primary and secondary graduates).

Assuming that the reduction of demand for schooling through employment has certain appeal, we must again ask whether or not a full employment policy is politically feasible in non-industrialized capitalist economies. I would argue that the distributive and production consequences of such a policy are so great that most capitalist governments will choose to continue rapid school expansion or to implement other (class biased) methods of limiting that expansion. - 100 -

FOOTNOTEM

1/ Secretariat of the Organization of American States, General Secretariat, Employment and Growth in the Strategy of Latin American Development: Implications for the Seventies, VII Annual Meeting of the Inter-American Economic and Social Council (CIES), September 10-20, 1971, Panama, p. 1.

2/ M. Mehta, "Industrialization and Employment with Special Reference to Countries of the ECAFE Region," Bangkok, Asian Institute for Economic Development and Planning, 1968, pp. 2h-25.

3/ Archibald Callaway, "School Leavers in Nigeria," West Africa (March 25, April 1, April 8, April 15, 1961), pp. 325, 353, 371-2, and 409, respectively.

V/ Hans Thias and Martin Carnoy, Cost-Benefit Analysis in Education: A Case Study of Kenya, (Baltimore: Johns-Hopkins/IBRD, 1972).

5/ Lewis Brownstein provides some data contrary to this statement based on a survey in rural Kenya. In his small sample, the primary school leavers were not so universally opposed to a career in agriculture as migration patterns would have us believe. See Lewis Brownstein, Education and Development in Rural Kenya, (New York: Praeger, 1972).

6/ Steve Marglin, "What Do Bosses Do?", Harvard University, Department of Economics, 1971 (mimeo).

7/ See, for example, Mark Blaug, et. al., The Causes of Graduate Unemployment in India, (London: The Penguin Press, 19 9).

8/ Martin Carnoy and Dieter Marenbach, "The Return to Schooling in the United States, 1939-69," Stanford University, 1973 (mimeo). We show that the rate of return to primary schooling in the U.S. fell despite a decrease in the absolute number of people with primary school in the labor, while the rate of return to taking college remained stable and the rate of return to graduate school rose (we only have data on graduate school incomes for the period 1959-69) despite rapid increases in the number of people with that level of schooling in the labor force.

9/ M. Carnoy, R. Sack, and H. Thias, "Middle Level Manpower in Tunisia: the Links Between Socio-economic Origin, Schooling and Job History," IBRD, October 1972 (mimeo).

10/ Richard Eckhaus, Estimating the Returns to Education: A Disaggregated Approach, (Berkeley, California: The Carnegie Commission, 1973). - 101 -

11/ For a great deal more detail on the issue, see David Gordon, Theories of Poverty and Underemployment, (Lexington, Mass: D.C. Heath, 1973).

12/ Philip Foster, in Lewis Brownstein, Education and Development in Rural Kenya, (New York: Praeger, 1972), pp. x-xi.

13/ Philip Foster, "The Vocational School Fallacy in Development Planning" in C. A. Anderson and M. J. Bowman (eds.), Education and Economic Development, (Chicago: Aldine Publishing, 1965), pp. 145-146.

14/ For an attempt to do this, see Carl H. Gotsch, "Technical Change and the Distribution of Income in Rural Areas," American Journal of Agricultural Economics, Vol. 54, No. 2 (May, 1972).

15/ We also have to consider that the absorption of labor into the industrial and service sector will have to come from rural areas, and this may decrease domestic food production and agricultural surplus. Much of the increased urban production may have to be used for exports in order to import food. The choice of goods (urban vs. agricultural) to be produced again enters into the picture. - 102 -

EDUCATION AND EMPLOYMENT IN DEVELOPING NATIONS

FIFTEEN YEARS LATER

Remi C i grnet

Before assuming office, many political leaders of developing nations have asserted that the limitations imposed upon educational development by colonial authorities prevented economic growth as well as political integration. As a result, the first decade of independence has been al- most uniformly characterized by particularly heavy investments in the field of formal schooling. These investments were based upon a number of assumptions formulated by political leaders and social scientists as well. First, economic stagnation was deemed to result from a scarcity of skills and more specifically from a shortage of qualified technical and managerial cadres. Put it in another way, the emergence of a class of highly trained technicians and managers could not but stimulate eco- nomic development. Hence, the need to increase school enrollments and particularly the size of post primary institutions. Secondly, economic stagnation was deemed to result from a scarcity of appropriate orientations and more specifically from the persistence of a traditional, particular- istic and ascription based system of values which discourages individual entrepreneurship. Economic growth was believed to require the eradication of such a system and the socialization of individuals to a set of univer- salistic and achievement-oriented motivations. In turn this socialization was deemed to be most effective in the context of formal educational insti- tutions. Finally, economic stagnation was deemed to result from the "scarcity of equality" and more specifically from the perpetuation of political and economic cleavages among ethnic and social groups. Formal schooling was assumed to minimize the implications of these inequalities since its main function is to ensure upward mobility.

Fifteen years have passed by. The very existence of this conference suggests that perceived interactions between educational and occupational - 103 -

institutions do not necessarily turn out to be self-fulfilling prophecies. In the present paper, I will successively examine each one of the assump- tions summarized in the previous paragraphs, and I will assess the limits within which the assumed interaction between formal schooling and economic activities appears to be upheld.

Education and occupational placement: An *Q;erview. As indicated, the first assumption states that formal schooling stimulates employment and access to the most rewarding slots of the modern sectors of developing economics. There is indeed a dearth of data to suggest that education influences both the structure and the location of local labor markets. While for a long time, social scientists concerned with African countries and peoples were eager to underline the psychological and non-economic motivations underlying individual spatial mobility, more recent studies have emphasized the influence that formal schooling exerts on the distance and the destination of migrations. Additional years of schooling increase the distance that individuals are willing to travel, and they also diver- sify the nature of the places that individuals choose as their targets of migration.

In addition, formal schooling is associated with a differentiation of the social networks that individuals use in order to learn about the opportunities of local labor markets. Illiterate adults or adults with a minimal amount of educational attainment only rely upon ethnic peers, relatives or former employers in this regard but their more educated counterparts are more likely to make use of the services made available by mass media or specialized governmental agencies.

Since education facilitates geographic mobility and leads to a greater differentiation of hiring procedures, the labor market should become more systematically and rationally organized. In turn this organization should help employers find the most qualified workers and correspondingly it should help individual job seekers to gain access to the most rewarding sectors of the modern labor market. Although political leaders, students and employers have frequently retained this particular perception of the functions of education, the actual picture is unfor- tunately less rosy and self-fulfilling prophecies do not always materialize. In the subsequent sections, I will analyze the variety of factors which prevent education from exerting a uniformly positive influence on economic growth as well as on employment opportunities.

Insofar as formal schooling facilitates urban migrations, it leads to a concentration of job seekers in modern cities. In turn, this con- centration leads to changes in the definition of the pertinent types of social problem. While rural populations are often defined as under employed, their urban counterparts face a more serious and crystalized crisis in this respect. Far from being relative, the shortage of urban economic opportunities tends to be absolute and it is indeed more diffi- cult to change workloads in an urban than a rural setting. In brief, while education may enable employers to obtain the qualified manpower they need to improve their productivitiy, it also accentuates the problems resulting from the imperfect nature of the labor market. - 104 -

These imperfections reflect disparities between rates of educational and economic development. And these disparities induce in turn the emer- gence of two types of jobless populations. In the Cameroon for instance, it is possible to distinguish between the deemployed individuals who have been pushed out of the labor market because of their insufficient quali- fications and the unemployed individuals who have not yet been able or willing to join the modern labor force. Older, the former have a uniformly low educational status while the latter, younger, have completed a part or the totality of primary studies. In fact, the first populations are out of the labor market because of their educational shortcomings while the latter remains without a job because of disparities between their occupa- tional aspirations and the actual opportunities offered to them by the labor market. As a corollary, there are differences in the length of the plight undergone by the two types of jobless populations. Deemployed individuals either return to their villages of origin and leave permanently the urban market or accept a position below the one they used to hold while their unemployed counterparts remain jobless for periods of time which often exceed one year. To sum up, high rates of educational development induce tensions between generations and more specifically between the less educated job incumbents and the more educated job aspirants. Further job aspirants are confronted themselves with serious dilemmas. The iden- tification of the point at which occupational aspirations cease to be realistic and of the point at which further occupational mobility might be reduced is not that easy.

While high rates of educational development facilitate the emergence of a class of unemployed individuals, the size and the characteristics of such a class vary with both the type of institution attended and with their organizational or proprietorship status. Individuals graduating or dropping out of vocational schools encounter more difficulties to find jobs and remain accordingly unemployed for longer periods of time than those with an academic and hence more general educational background. An increasing number of authors have criticized the "fallacy of vocational schools" in developing nations. In societies with a low and unstable pattern of division of labor, it is those individuals with diffuse rather than specific occupational orientations and those with a general rather than specialized training who are the most likely to find easy access to the job market. Similarly, the size of the unemployed population is likely to differ between centralized and decentralized educational systems. On the one hand, centralization enables educational authorities to adjust more rapidly their output to fluctuations in the local labor market. On the other hand, d$centralization leads the same authorities to feel more committed toward the occupational fate of their graduates and hence to maintain the channels and networks necessary for the occupational place- ment of their outputs.

In addition, high rates of educational development are associated with a significant increase in the number of frictions operating in the labor market. As a result, the implications of educational attainment differ as between various sectors of employment. An analysis of changes in the educational backgrpund of white and blue collar workers offers a case in point. .Among olaest age groups and hence during the early stages - 105 -

of economic and educational development, there was a sharp contrast in the educational attainment of manual and non-manual wage earners. The majority of older manual workers is illiterate and only kn-ws hovw to communicate verbally in a European language while most non-manuals have completed a primary education and have often gone beyond. Among newcomers, the situation and the two educational distributions tend to overlap. In other words, while differences in educational attainment used to be considered both by employers and by their salaried personnel as the main basis of a universal occupatioral hierarchy, this has ceased to be the case. Further older manual workers compensated for their low level of educational attainment by participating frequently in programs of on the job training either within a large scale modern company while their non-manual counterparts were able to join directly the labor force after their graduation Am an . Such a contrast has ceased to be apparent among the newest cohorts of job seekers and this trend, toe, suggest changes in the patterning of the labor market.

The declining salience of this- occupational hierarchy presents a number of implications. During earlier stages of development, the occupational mobility of non-manual workers was primarily determined by their level of formal schooling and was, therefore, sanctioned by employers, while changes of job or of employer was more independent of the educational background of manual workers and was not necessar- ily accompanied by a higher level of occupational attainment. Similar- ly while variations in educational attainment have clearer consequences on the wage structure of older non-manual workers than on that of their manual counterparts, the situation is more fuzzy among the newcomers into these two major sectors o[ employment. In fact, the fit between education and economic rewards is often currently closer in the case of new blue than white collar individuals.

Finally, the growing supply of educated individuals has been associated with changes in the hiring power of employers with differing legal and technical characteristics. During earlier stages of develop- ment, there was a visible hierarchy among employers looking for a non- manual labor force and large scale internationally-based companies were most likely to preempt job seekers with the highest educational qualifica- tions. In contrast, such a hierarchy was not visible among enterprises looking for a manual labor force and manual workers with differing levels of education were more evenly distributed among the variety of local firms and enterprises. Differences in the educational qualifications of non- manual workers employed by firms with differing characteristics are currently declining, while the educational profile of the manual labor force of enterprises with differing organizational features are increas- ingly distinct.

To summarize this first part, it is no longer certain that an in- crease in the size of the educated population necessarily stimulates economic growth and necessarily facilitates individual employment. In a recent publication, Professor Blaug indicates that there are increased variations in the patterns of association between educational attainment and employment rates. In some countries, this association is positive; - 106 - in others it is negative and finally in a last group, the interaction between these two variables follows a curvilinear pattern, the products of secondary schools having more difficulties to find jobs than their counterparts having completed higher or lower cycles of studies.

Insofar as the association between education and occupational placement varies cross-culturally, it seems pertinent to examine whether such variations do not reflect both contrasted rates of educational de- velopment and contrasted disparities between rates of economic and educational growth. In addition, it seems pertinent to examine whether such variations do not result from contrasted profiles in the structure of the local economy and more specifically in the relative size of pri- mary, secondary and tertiary sectors of activity. Indeed the fit between occupational aspirations and occupational opportunities should not have the same nature in cultures where the active population is concentrated in one particular sector of the modern labor market and where it is more evenly distributed across branches of activity. Finally, the influence of educational attainment on occupational placement varies with the mechanisms linking the educational institutions to the economic world. There should be contrasts along these lines between centralized and decentralized educational systems.

The socializing effects of educational institutions: implications on the labor market. The persistence of urban unemployment is clearly a function of the perpetuation of ethnic and familial solidarities and insofar as formal schooling is supposed to stimulate the adoption of individualistic Western-like familial orientations, there should be a decline in the salience of urban familial institutions and hence in the structures enabling young individuals to remain unemployed for long periods of time. This assumption, however, turns to be incorrect. In Africa, educational and occupational attainments are often associated with the perpetuation of polygyny and of residential familism, that is with the concentration-of relatives under a same roof. In fact, while the uneducated manual workers of the private sector are unable to have simultaneously many wives, many relatives and many children, the more educated non-manual civil servants are often able to maintain these three facets of traditional familial arrangements.

Hence, the influence that formal schooling exerts on familial roles and hence indirectly on the labor market is not necessarily what planners have expected it to be. This is because the normative social- ization of schools differs from that of traditional groups and is not necessarily more powerful. This is also because of the differential ex- posure of the two sexes to the educational environment. In Douala for example, while an increase in the educational attainment of married women is associated with a decline in the number of children they have ever born, an increase in the educational level of their husbands has the opposite effect. To sum up, while planners assumed that the socialization functions of schools would affect the labor market by the changes they would introduce in individual patterns of familial behavior, their ex- pectations have turned out to be ill founded, at least in a short-term perspective. Indeed successful Africans often tend to treat familism and mobility as complementary rather than mutually exclusive. - 107 -

The socialization functions of educational institutions should exert a more direct influence on the functioning of the labor market. First, many planners anticipate educational experiences to stimulate entrepreneurship. Yet, many studies conducted in Africa show that increases in educational attainment are associated with a parallel increase in the stress that individuals place on security of employment. Educated individuals prefer to be employed by large scale organization than to start their own venture. Similarly they accord a higher value to stable jobs than to occupations with high risks and potentially commensurate rewards. In effect, planners seem to make a logical mistake in this regard, for it is not certain that formal education has stimulated individual entrepreneurship in the European countries of the XIXth century. It is not certain either that the patterns of development characteristic of such countries should be duplicated by the Third World of today. After all, international loans and programs of assistance are more likely to be extended to bureaucratic organization than to individual entrepreneurs.

Second, many planners expect educational experiences to facilitate the adaptation of individuals to the particular jobs for which they are trained. Such expectations turn out to be incorrect. Perceptions of the current occupational hierarchy tend to be more powerful determinants of the occupational destination of students than the socializing influence to which they are subjected in the context of the institution they attend. Insofar as jobs such as teachers or as farmers have a low prestige and a perceived low income, the populations of teachers colleges or of agri- cultural colleges are likely to move out of these fields as soon as they can, either during their academic career or after their graduation.

To summarize, the effects that the socialization functions of schools are supposed to exert on the functioning of the labor market are more moderate than we would like them to be. Two types of research appear to be needed in this context. First, the impact of the socialization functions of schools may vary as a function of the contrasts between the norms and values they seek to promote and the system of orientations prevailing among traditional familial groups. Secondly, the impact of the socialization functions of schools may also depend upon their organ- izational set up and more generally upon historical legacies. While I have noted that in the main cities of East Cameroon, educational attain- ment favors both the perpetuation of polygyny and of large sized families, these two sets of variables appear to be negatively related in the West Cameroon, formerly subject to British influence. Insofar as the first part of Cameroon was following a centralized pattern of political and educational organization, it is possible to infer that centralization favors the perpetuation of dependent behaviors on the part of individuals and prevents them from acquiring the orientations of self-reliance which allegedly underlie entrepreneurship and hence economic development. Favor- ing the persistence of commitment to traditional ideals, centralization may also prevent individual commitment to a specific occupational niche. If such assumptions prove to be correct, programs of self-help and of community assistance should be both less numerous and less effective in the context of centralized countries. - 108 -

Educational and social inequalities. Because of divergences between traditional and modern systems of stratification, the schools of many developing countries have been initially open in their patterns of re- cruitment. Ghanaian, Nigerian and Ivory Coast schools,for instance, have opened their doors to a large number of children coming from a farming background. In fact in all these countries, it is the offspring of the unskilled and semi-skilled manual workers of the urban settings who have the least chances to gain access to the higher rungs of the educational ladder. As these systems grow, however, it is not certain that their recruitment policies will remain as open as in the past. The growing rigidity of the current social systems of social stratification as well as the growing decline in the importance of the plums attached to educational experiences may be associated with parallel increases in the differential enrollment rates of distinct ethnic and socio-economic groups. If this is so, far from facilitating upward mobility .and hence far from mediating a redistribution of wealth, formal schooling will ultimately confirm the preeminence of emerging middle and upper classes and will hence perpetuate existing inequities.

While the emerging system of social and ethnic stratification may entail differential patterns of access into educational institutions, it may also be associated with differences in the rewards assigned to particular levels of educational attainment. In the Cameroon, for instance, there are sharp contrasts in the skill and income levels of individuals with a same amount of formal training but with different ethnic origins. The Bamileke, for instance, are not entitled to obtain the same returns from their educational investments as their counter- parts coming from the more Todernized coastal ethnic groups. This reflects not only their later entry in the processes of modernization but also the stereotypes they evoke on the part of their co-workers and hence on the part of potential employers. In brief, the frictions operating in the labor market prevent educational currency from having a universalistic value and hence limit the equalizing power of formal schooling.

Summary and conclusions: Educational development in the Third World has been based upon three postulates. First, a substantial in- crease in the number of graduates from post-primary institutions should accelerate economic growth. Although stagnation may result from a short- age of qualified cadres and technicians, it does not follow that the presence of such individuals will facilitate economic development and their employment. The relationship between education and occupation is not the same when one considers the market as a whole and its com- ponents. In fact, variations both in rates of educational development and in the institutional arrangements of educational and economic enter- prises induce variations in the form and the magnitude of the relation- ship between education and occupation.

Secondly, economic development was supposed to be stimulated by the socialization functions of schools. While formal schooling enables individuals to acquire specific skills, it does not enable them to ac- quire particular sets of values and orientations. As a matter of fact the direct and indirect effect of the socialization functions of schools on the labor market are more modertate than it was believed. - 109 -

Finally, available evidence suggests that, although initially, for- mal schooling contributed to change current patterns of social stratifi- cation, this has ceased to be the case. Patterns of educational inequal- ity are currently more likely to reproduce rather than alter other forms of inequality operating in the society at large.

In view of these skeptical comments, is it possible to suggest remedies likely to alleviate the problems of unemployment plaguing developing countries? Insofar as such problems are often described as transitory, solutions could consist in "returning to the point of origin" and hence in limiting the patterns of mobility resulting from educational experiences or alternatively in accelerating the emerging processes and in enhancing the patterns of mobility acquired through schooling.

In the first perspective, we are acknowledging the differential growth of the various parts of the educational system and more specific- ally the overgrowth of post-primary institutions. Since this overgrowth has induced urban migrations and has accentuated urban-rural disparities in life style, the task is to lower- the gap between the two populations. It implies not only changes in the profile of primary school systems but also the development of programs of closely connected with economic activities. The success of such operations depends on the extent to which individuals cease to perceive educational experiences as being closely related with particular positions in their life cycles. It also depends upon the patterns of development of the programs of adult education. Frequently, these programs tend to fail, because they are initially launched in the economically most marginal rather than the most successful parts of the country. In short, the strategy of the first perspective consists in returning from a systematic unemployment to a more diffuse under-employment.

In the second perspective, the solution implies the recognition that political and economic boundaries do not necessarily coincide. In countries such as Senegal, Mali, Algeria and Tunisia, it seems clearly impossible to adjust rates of economic and educational development. At the same time it seems quite obvious that a significant part of the labor force of such countries is attracted toward -the markets of highly indus- trialized countries. Under such conditions, the solution consists perhaps in recognizing that local labor markets go beyond existing political boundaries. The function of education is hence to accelerate the adapt- ations of migrants to the demands of industrial settings and hence to en- hance the returns obtained from migration.

Clearly, however, these strategies cannot be universal. To para- phrase here Professor Blaug, "there is no panacea for the time being but a series of piece meal social engineering", the validity of which remains culturally relative. - 110 -

R.APPORTEUR I S CsOII.TS

Mr. Chenery opened the session reauesting a brief statement from each of the three contributors on the focal issues of their respec- tive papers.

Mr. Blaug emphasized that there were no quick and easy solutions to the problem of the "educated unemployed" in LDC's, since its main source - the overly rapid inflow of educated youths into the labor market relative to the system's capacity to absorb them - could not be checked in the short term in most countries. He noted that the growth of higher education certificate holders could be gradually eased by reducing the private net benefits associated with it. To achieve this, he proposed: (a) shifting the educational cost burden from society onto its recipients and (b) reducing the premium paid f'or such certificates in public sector jobs, which account for a significant share of educated employment in most LDC's.

Mr. Carnoy stated that the problem of "educated unemployment" in LDC's could not be dealt with outside the context of "general unemployment" affecting these countries which, he argued, are essentially independent from the "product" of the educational system. Thus, little could be expected from educational reform towards the solution of that problem. Rather, its roots lie in the nature of the capitalist-dependent economic system characterizing most LDC's.

Mr. Clignet began by calling attention to the imperfections of the labor market as a potentially significant factor underlying the problem of educated unemployment in LDC's and stressed the need to study and assess its relationship with the hiring practices of the public sector and private employers. He also raised the following issues: (a) the effect of foreign-born personnel on the employment of nationals; (b) the employment related advantages and disadvantages of centralized vs. decentralized educational systems and (c) the inter-relationships between education, migration and employment.

Discussion

Mr. Blaug stressed the importance of using a cost-benefit approach to evaluate the relative merits of alternative policies to reduce unemployment. On this point, Mr. Dore noted the difficulty of assessing the benefits associated with the consumption component of the educational experience.

Mr. Dore went on to criticize what he deems to be an excessive preoccupation and emphasis on the wage and salary sector of LDC's, and corresponding neglect of the "unorganized" or "traditional" sector, where he feels that a substantial proportion of the labor force will have to be accommodated during the next couple of decades as a result of its - 111 -

rapid rate of increase and the limited labor absorptive capacity of the "modern" sector. His conclusion being that educational reform should be oriented towards increasing the productivity of individuals in the traditional sector.

Mr. Erder noted that educational economists tend to assume a "defeatist" attitude towards the unemployment and related problems currently present in LDC's by taking the prevailing socio-economic conditions as given and then trying to adapt the educational system to such conditions. A more constructive approach, he argued, lies in striving to change these conditions; and thus, the appropriate query becomes one of how can the educational system respond to appropriate development strategies.

Reflecting on the problem of education and unemployment in LDC's, Mr. Chenery raised the question of why the neo-classical mechanisms of market adjustment assumed by most of the economic development theories in vogue during the 1960's have failed to bring about the expected equilibrium between the demand ard the supply of these skills. Is the elasticity of substitution between educated manpower and other factors of production much lower than anticipated by these models?

Mr. Harberger noted that his perception of the problem was not so bleak, citing the examples of: (a) Brazil, where the employment opportunities available to economics graduates without previous work experience were exceptionally good; (b) Panama, where the application of a Dennison-type model did well in explaining the sources of its exceptionally high rate of growth during the past fifteen years or so, attributing a large role to the increasing quality of labor and (c) India, where employment had grown by close to 50 million people during the past decade. He also pointed out that the typically wide divergence between social and private costs of secondary and higher education had the effect of augmenting the supply of educated manpower; in some countries, perhaps, beyond the point to which it would be justified on social rate of return grounds.

Mr. Selowsky raised the need to distinguish between two issues: (a) Why does the market attach a value to educational attainment?; and (b) accepting the legitimacy of using market wages as an index of education's value, which wages do we use under conditions of educated unemployment and distorted labor markets? Addressing the latter question, he noted, on one hand, the prevailing skepticism concerning the effect of education, at the margin, under such conditions; and on the other, the results of rate of return studies during the past ten years showing high rates for elementary and secondary education relative to other types of investment. Can these results be reconciled with the presence of educated unemploy- ment? The current approach to this problem, of simply multiplying the wages of employed workers by the probability of employment in the computation of rates of return, is a very mechanical technique which takes no account of the way labor markets function. A possible step forward in this area would be to use models differentiating between "restricted entryt" and "free entry" labor markets, and use the labor income rates prevailing in the latter as the relevant "wage" on which to compute the rates of return to education. - 112 -

Mr. Chenery pointed out that the problem of educated unemploy- ment was by no means universal among LDC's and, in particular, that India and.-Ceylon - on which much of the discussion was being concentrated - were quite atypical in their low rates of growth in both output and employment during the past years. He went on to emphasize that the economic development problems affecting these and other countries were not particularly related to their educational policies.

Mr. Edwards said that the educational system responds to a variety of factors and changing conditions that lie outside of it, particularly to the needs of the most powerful groups within the society. The policy relevance of this relationship from the Bank's point of view is that it should consider the potential impact on the educational system when evaluating non-educational projects.

Mr. Carnoy made the following points: (a) educated unemployment is not the main problem, but rather "mass unemployment," wherein the poverty problem lies; and (b) the demand for education increases with the rate of unemployment (evidence: Puerto Rico, high unemployment; and some Western European countries, relatively low unemployment, low demand for increased schooling). A lively discussion followed on the possible relationship between the nature of the socio-economic system and the corresponding likelihood of solving the unemployment problem in given countries, in which Messrs. Chenery, Jallade, Carnoy, Bowles and Harberger participated. No significant convergence of opinions on the matter was apparent.

Addressing himself to the relationship between unemployment and education, Mr. Dore commented on the possible effect of the educa- tional experience on the way individuals respond to labor force ques- tionnaires as to their employment status. Secondly, he noted that the educated unemployment problem had implications not only as regards income foregone, but also on the level of frustration and its consequences among the affected individuals.

Mr. Hawkins noted that the discussion thus far had ignored two important factors bearing on the nature and dynamics of educational systems: (a) the international transmission of educational features and training; e.g., the influence of English and American educational practices on the educational systems in their respective colonies and countries within their sphere of influence; (b) the ways in which educational change occurs;and (c) the effect of parental attitudes.

Mr. King pointed out the relevance of the private-public sectoral composition of the demand for educated manpower as regards: (a) the issue of whether the labor market pays "too much" to the highly educated and (b) the incidence of educated unemployment itself.

In response to a previous request by Mr. Simmons for suggestions of possible criteria to disaggregate countries along certain typological categories to facilitate the empirical analysis of education and employment - 113 - in LDC's, Mr. Erder offered the following: (a) the nature and degree of political options and constraints; (b) resource endowment, economic management and the rate of output growth;and (c) the nature and trends in the distribution of national income. To these Mr. Blaug added the criterion of whether or not countries have made some sort of publicly stated comnitments on the type of educational changes being sought; e.g., Sri Lanka's and the Philippines' to the effect of emphasizing primary education relative to secondary and higher levels.

Mr. R. Moran - 114 -

EDUCATION, CLASS CONFLICT AND UNEVEN DEVELOPMENT

Samuel Bowles

1. Introduction

In liberal social theory, the educational system -- like the state -- has been presented as an egalitarian institution, exogenous to the main economic relations of the society. An important defense of the capitalist system has been the purported efficacy of state action and particularly educational policies in ameliorating the conditions of alienated labor and economic inequality generated by the wage labor system.

This aspect of the liberal viewpoint manifests itself in convention- al economic theory in two ways. First, the belief that democratically elected governments in capitalist societies would pursue effective income redistribution policies has provided the normative basis for the artificial separation of distributional and allocational aspects of economics. This separation, has, in turn, served to exempt most economists from serious study of income inequality, thus allowing the discipline to concentrate on the relatively successful aspects of capitalist growth -- total production of goods and services.

Second, the liberal view of education and of the state has diverted economic analysis away from an investigation of the detenniriants of the factor supplies in a society. Although some headway on this score has recently been made in the study of economic development, the economics of education, and demography, factor supplies are ordinarily called "endowments"

* I would like to thank Herbert Gintis for suggestions and criticism. Some of the ideas and the econometric work presented here is elaborated in more detail and with bibliographic references in my "Class Power and Mass Educat- ion" (unpublished mimeo, 1971); "Unequal Education and the Reproduction of the Social Division of Labour", Review of Radical Political Economics, Vol.3, No. 3, Fall 1971; "The Integration of Higher Education into the Wage Labor System", Review of Radical Political Economics, forthcoming, 1973; and "Cuban Education and the Revolutionary Ideology", Harvard Educational Review, November 1971 - 115 -

and taken to be exogenously determined. Conventional economic analysis of international specialization, the distribution of income, and the choice of techniques, to name only a few affected areas, begin by positing a set of factor supplies or exogenously determined changes in these supplies. Whether the role of the state as a determinant of factor supplies is recognized, as in some recent planning models, for example, state action itself is taken not as an outgrowth of the economic and social relations of the whole society, but as a normative instrument in the hands of government "decision makers" acting in the enlightened or at least neutral.. pursuit of economic growth.

Even the most cursory reading of the educational history of capitalist societies suggests that the abstract liberal view of the state -- as exogenous and egalitarian -- does not provide an adequate basis for an investigation of the relationship between schooling and inequality. Nor will it shed much light on the dynamics of educational development in the process of capitalist growth.

This essay is motivated by an alternative view of the state and of education. The state, in this interpretation, serves to stabilize or reproduce social relations in the interests of the capitalist class and other dominant groups of the society. The economic structure is itself influenced by the state, ordinarily in ways which enhance the power and income of the politically powerful groups. The educational system as an important influence on political behavior as well as the distribution of factor supplies, is one of the main instruments of state power in perform- ing these functions.

The inadequacy of the implicit political theory underling con- ventional economics is matched by a parallel shortcoming of the economic theory itself. The theory of the competitive capitalist economy in equilibrium fails to capture much of what is central to the process of economic growth and the role of schooling in the reproduction of economic inequality. In section 2, I will outline an alternative framework which emphasizes the uneven nature of capitalist development as manifested in the counterpoint of stagnation and expansion in traditional and capitalist sectors of the economy. The process of income distribution and the evolution of class structure in the framework of uneven capitalist develcrpment are presented in section 3. The instability of the capitalist growth process and in particular the contradiction between capital accumulation and the reproduction of the social relations of production is described in section L. In section 5 I will argue that schooling plays an important role in resolving this contradiction and in facilitat- ing the more or less smooth expansion of the capitalist system. In the concluding section, I will argue that educational inequality and inequality of income are both reflections of the class structure of capitalist societies. I infer from this that changes in educational policy which do not alter the class structure will have relatively little effect on the distribution of income. - 116 -

I will develop these arguments as general propositions relevant to, but not directly applicable to, the experience in most capitalist countries. Moreover, I have purposefully emphas- ised inter-sectoral relations and the tendency towards uneven development to the virtual exclusion of other contexts which would be included in a more comprehensive, less abstract model. Any concrete application will, of course, require substantial articulation and perhaps revision of the basic model.

2. Accumul-ation and Uneven Development

The dynamics of the uneven spatial and sectoral develop- ment of the capitalist economy can be captured by a simple dual economy model which centers attention on the internal organization and relations between a capitalist and a traditional sector. The capitalist sector is characterized by technological dynamism, relatively rapid accumulation of :capital, and a social organization of production whereby the great majority of people in the sector work for wages and salaries. This group of so-called wage labor has no claim on the product of its work; nor does it exercise within the enterprise any direct control over the choice of commodit- ies to be produced, technologies of production, or organisation of work. The capitalist sector is run by capitalists. The arch production unit is the factor, the large business office, or the modern plantation.

The traditional sector, by contrast, is technologically stagnant, with little accumulation of capital. Though the social relations of production may vary, wage labor is relatively unimportant; the family or the craft shops is the archetypal production unit. In this sector, workers own or at least exercise significant de facto control over most of the factors or production. In addition, they exercise considerable discretion over their hours and methods of work, and characteristically own a substantial part of the product of their labor. The property relations of the traditional sector may support an exploiting class, characteristically a group of land owners who, while performing little or no direct role in production, expropriate the meager agricultural surplus through a system of share cropping or rent tenancy. Allied in political and economic interest with this group may be other traditional elites such as those associated with the established religion.

The accumulation of capital in the capitalist sector is accompanied by the integration of workers from the traditional sector into the capitalist sector. It is this process of integration into the wage labor system which provides the impetus behind educational expansion and the evolution of school structure. - 117 -

But first, we must consider the process of income distribution in this simple model.

Inequality in the system as a whole will depend on the degree of inequality within each sector and the degree of inequai4y between sectors.

The distribution of real income in the traditional sector is determined largely by forces outside this model. Suffice it to say that because of the relatively small surplus in the traditional sector, income is relatively equally distributed in this sector compared to the capitalist sector. In the capitalist sector, the division of the product between capital and labor depends upon the relative strength of workers and capitalists. As long as real wages in the capitalist sector exceed real incomes of workers in the traditional sector, income is relatively equally distributed in this sector compared to the capi-talist sector. In the capital- ist sector, the division of the product between capital and labor depends upon the relative strength of workers and capitalists. As long as real wages in the capitalist sector exceed real incomes of workers in the traditional sector, wage workers will be in a relatively weak position.. Their weakness is based on the existence of a "reserve army" of workers in the traditional sector who can be recruited to replace any workers or groups of workers who are unwilling to work at the going wage. The size distribution of income in the capitalist sector will therefore depend upon the outcome of this struggle over the division of the product, and the degree of concentration of wealth in the capitalist sector.

Abstracting from the state sector, the overal distribution of income can now be summarized. The first group of workers, those in the traditional sector receive Qt - rQt, or the average productivity in that sector minus the proportional rent share paid to the landlords. Their total share in social output-is (l-r) QtL where Lt is the number of workers in the traditional sector. Iandlords as a class receive rQtLt. The second group of workers, wage workers in the capitalist sector receive (l-r) Qt + S, where S represents the premium above the income of workers in the traditional sector which capitalist sector workers have gained. Capitalists as a class receive the remainder of the output of the capitalist sector,[LL QC - (l-r) Qt - SI where Lc and Qc are respectively the number of workers and average output per worker in the capitalist sector. The per capita income of capitalists is clearly Le [QC - (l-r) Qt - where K represents the number of K capitalists.

The class income distribution of the entire society will, of course, change over time in response to changes in the relative sizes of each sector, changes in the relative degree of productiv- ity in the two sectors, and changes in the relative bargaining power of capital and labor in the capitalist sector and changes in the rent share, r. The technological dynamism and superior ability to accumulate capital of the capitalist sector coupled with the ceiling imposed on wages in" the capitalist sector by - 118 - reserve army, tend to increase inequality both within the capitalist sector, and between and the traditional sector.

Workers in the capitalist sector will attempt to raise their share of the product by raising S. In part this will be attempted by isolating -- insofar as is possible -- the capitalist sector from the traditional sector. It is in their immediate interest to promote labor scarcity in the capitalist sector by resisting labor-saving innovations and by limiting the ability of capitalists to substitute new labor from the traditional sector for those already employed in the capitalist sector. Rapid capital accumulation in the capitalist sector, productivity increase in the traditional sector, and a decline in the landlords' rent share are likewise in the interest of wage labor. Capitalist interests are to raise L c) r, and Q , while lowering Qt and S. Successful capitalists will benefit by increasing the concentration of capital, raising Lc/K by driving other capitalists out of business and into either the wage earning class or the traditional sector. It will be noted that while capitalist and wage labor's interests are generally opposed, they concur in an interest in the rapid accumulation of capital, which at once raises Qc and (barring labor saving innovation) the bargaining power of wage lator, and hence S. Similarly, capitalist and landlord interests are generally opposed: landlords, unlike capitalists, benefit from raising it; moreover, rapid accumulation in te cap4ta'.ist sector poses the spectre of scarce labor in the traditional sector, and hence a lowering of r. However, these two classes share a common interest in raising r.

3. Contradictory Development and State Power.

The simple mechanics of this two sector model lay bare the fundoaiental process of income distribution, but they only hint at the drastic structural changes and social conflicts associated with the accumulation of capital and the integration of successive grcups of workers into the wage labor system. We may distinguish two distinct problems: the necessary production of a labor force able and resigned to work productively in the capitalist sector; and the equally necessary prevention of the development of a class conscious working class.

Capitalist profits depend (among other things) upon Qc the average productivity of labor in the capitalist sector. Yet the social and technical laboring skills necessary for a productive capitalist labor force are in general relatively scarce in the laboring populations of the traditional sector.

The movement of the labor force out of the traditional sector increases the demand for labor skills which were not easily acquired through emulation of the parents' role in production. - 119 -

Growing up in the home is no preparation for the demands of factory life, for the capitalist enterprize is a vastly different social organization, with a quite distinct set of social relations from those of the family. The factory worker or for that matter, the plantation or office worker, has to learn time consciousness, new forms of discipline, new sources of motivation, and respect for authority outside the kinship group. He or she has to adjust to detailed supervision in highly routine and fragmented tasks.

Capitalist profits depend, also, upon the power of capitalists relative to their workers. With the rapid expansion of the capitalist relations of production, it becomes increasing- ly difficult to thwart the development of class consciousness and militant collective actions among workers. While the existence of a reserve army in the declining traditional sector weakens the position of workers in the capitalist sector, the material conditions of the capitalist sector itself enhance the workers' power to undertake collective action against capital- ists. Workers are thrown together in oppressive factories; and the isolation of economic activity which had helped to maintain quiescence in the traditional sector is broken down. With an increasing number of families uprooted from the land, the workers' search for a living results in large-scale labor migrations. Transient -- even foreign -- elements came to constitute a major segment of the population, and begin to pose seemingly insurmountable problems of assimilation, integrat- ion, and control. Inequalities of wealth become more apparent, and are less easily justified and less readily accepted.

The accumulation of capital and the integration of increas- ing number of workers into the capitalist sector thas produces a potentially antagonistic response in the form of the growing class of wage laborers. The demands of this new class, and its entry into political life threaten to disrupt the reproduction of the capitalist class structure. This contradiction between the accumulation of capital and the reproduction of the class structure has appeared in militant class struggle, and other forms of political activity: in the growth of labor organisations, mass strikes, nationalist movements, populist revolts, and the rise of socialist political patties.

TPhle preservation of the capitalist order, and the expansion of capitalist profits, requires, however, that class conflict be confined to the isolated daily struggles of workers at the enterprise level. The ever present contradiction between accumulation and reproduction must be submerged, or channeled into demands easily contained within the outlines of capitalist society. The contradiction may be temporarily resolved or suppressed in a variety of ways: through ameliorative social reforms, through the coercive force of the state, through a heightening of racist, ethnic, tribalist, linguistic, sexist, credentialist and other distinctions which provide the basis - 120 - for employer strategies of divide and rule, and through an ideological perspective which served to hide rather than clari- fy the sources of exploitation and alienation in the capitalist order.

14. kucation and the Reproduction of the Capitalist Order.

The expansion of mass education, embodying each of the above means, has been an important complement to the aimed force of the capitalist state in resolving -- at least temporarily -- the contradiction between accumulation and reproduction. The school system in most capitalist countries serves as both recruiter and gate keeper for the capitalist sector. As recruiter the school system serves to produce a labor force able and resigned to work productively in the capitalist sector. The contribution of schooling to increasing Q. takes two main forms: first, the development of workers with those technical and scientific capacities needed for efficient production; and second, the inculcation of values, expectations, beliefs, and modes of behavior required for the adequate performance of adult work roles. Although very few of the intellectual skills learned in school are directly transferable to the capitalist workplace, basic scientific knowledge as well as communcation skills and mathematical abilities are an essential ingredient in becoming and remaining competent in some jobs, particularly those involving directing and technical functions.

The role of education in shaping personalities, attitudes, and beliefs, on the other hand, is of importance for all workers in the capitalist sector. The "hidden" content of schooling -- the values, expectations, and patterns of behavior which schools encourage -- is primarily conveyed not by the formal curricilullm, but by the social relations of the schooling process itself. Whether established relations amcng students are competitive or cooperative, whether relations between students and teachers are democratic or authoritarian, and whether relations between indicators of what is taught in schools than texts or formal curricula. The authoritarian, competitive and alienating social relations of schooling in capitalist societies are instrumental in the creation of a labor force attuned to the social relations or production of the capitalist enterprise.

The expansion of the forces of production cannot easily be separated from the second main function of schooling as labor recruiter for the capitalist sector: the reproduction of the social relations of production. This process does not begin in the school, nor does it end there. Family structure and child - 121 -

rearing practices form an important part of the early socializat- ion process. Following school, the social relations of production in the place of work exert a continuing influence on personality development. Some types of behavior are rewarded; others are penalized. The nature of the work process limits the range of attitudes, values, and behavior patterns which people can exhibit and still find employment.

Yet the school itself plays a central role, particularly in periods of rapid sooial change. The generation of an adequate labor force is greatly facilitated if the aspects of the socialis- ation process operate in a complementary fashion. The preparation of young people for integration into the capitalist sector requires that the social relations of production take a particular form. The control of the educational process is denied to students, and success is measured by an external standard -- grades and exam marks -- which become the main motivation for work, so that any intrinsic interest in the product of one's effort -- knowledge -- or the process of production -- learning -- is eclipsed. In short, the social relations of production are replicated in the schools.

The correspondence between the social relations of schooling and the social relations of production does not necessarily imply a common education for all children. The capitalist relations of production, characterized by a hierarchi- cal division of labor, require that a relatively small group -- the future technical and managerial personnel -- develop the capacity to calculate, decide, and rule, while a much larger group develop the capacity to follow instructions willingly and accurately in boring and alienating jobs. This stratification of the future labor force is accomplished in part through the different amounts and types of schooling for different children. Thus the class structure of the capitalist sector is replicated in the school system: the children of parents in directing and technical positions tend, for example to acquire an education which qualifies them to move into similar jobs.

We can now restate and extend the correspondence principle: as the social relations of schooling reproduce the social relations of schooling reproduce the social relations of production in each age group, the class structure is also reproduced from generation to generation. The correspondence between educational and economic structures relates not only to the social relations at the level of the individual enterprise and school, but to the aggregate social structure as well. Where the international division of labor results in a class structure dominated at the top- by foreign management and technical personnel, we may expect to find a corresponding underdevelopment of the nation's advanced educational institutions. - 122 -

5. Class Interests and Educational Dualism.

The correspondence between the social relations of production and the social relations of schooling is at the root of the capitalist interest in the education of workers. But the development of schooling must be attuned to the expansion of the capitalist sector. Pressures for mass education for all -- even for workers destined for the traditional sector -- may be acceded to if the ideological or political benefits of this expansion are seen as particularly great. But the risks to the capitalist class are evident.

First, education for all might reasonably be expected to facilitate productivity increases and technological dynamism in the traditional sector, a development which, as explained above, capitalists would rationally oppose. Second, were the population to all receive, say, an elementary school education, all might expect to receive employment in the capitalist sector. The resulting rural to urban migrations, massive urban unemployment, and outrage at frustrated expectations on the part of the unsuccessful would provide the raw material for an anti-capitalist upheaval. While the downward pressure on capitalist sector wages would be welcome, the risks of the development of a common consciousness between traditional and capitalist sector workers will at times more than offset this short run economic advantage. Thus, in addition to preparing young people for work in the capitalist sector, the school system must (and does) provide an apparently objective method of screening young people out of the capitalist sector. This is the gatekeeping function of schooling.

The long run reproduction of the capitalist order often dictates the restriction on the number of capitalist sector workers, accompanied by intensive efforts at raising W. through both education and labor saving capital accumulation, and the acquiescence by capitalists to a fairly large wage premium over the average earnings in the traditional sector. Through its relatively high wages, the small capitalist sector working class -- which can be called an aristocracy of labor -- is thus more firmly committed to the capitalist system, and set apart by educational labeling and consciousness from the masses of the population who work in the traditional sector or, as many do, on the periphery of the capitalist sector. - 123 -

The class interests of landlords and their associated traditional elites are,not surprisingly, quite distinct from those of the capitalists.

For a number of reasons, the landlord class and tradition- al elites have little economic interest in the expansion of mass education. The main assets held by these groups is land devoted to family farming, often at a near subsistence level. Neither the social relations of production in peasant agriculture, nor the actual production methods require the type of socialization and training ordinarily undertaken in primary schools. On the contrary, primary schooling often is the vehicle whereby children escape from the traditional sector of the economy. The expansion- or preservation of the traditional economy is of paramount import- ance to the traditional elite. Policies which facilitate 'the growth of the modern capitalist sector, and threaten to draw labor out of the traditional sector are ordinarily opposed. The hierarchical position of the traditional elites is also not enhanced by the spread of mass education. I conclude that schoolig is not complementary to the assets which define the landlord class and traditional elites and which provide their income and prestige.

The political interests of the capitalist and the tradition- al elites are equally divergent. While the political position of the traditional elite depends on the maintenance of traditional values and often upon mutual supporting relationships which religious institutions, the capitalist class seeks to weaken and circumscribe many of these values and institutions. Indeed, historically, capitalist support of the expansion of primary schooling in the currently advanced countries was at least in part, due to its purported efficacy in breaking down old ideas, in implanting new rational patterns of thought more consistent with the market, and in inclucating a set of values which would serve as a substitute for obedience to traditional rulers, namely respect for modern bureaucratic authority, as manifested in the organization of the capitalist enterprize.

I conclude that for both economic and political reasons, the traditional elite will have less of an interest in mass education than the capitalist elite.

The interest of capitalist sector workers is to limit the spread of education to other sectors of the society, while extending that available to themselves and their children so as to minimize the competition for jobs in the capitalist sector. Thus, there is a basis for a capitalist-landlord-labor aristocracy alliance in limiting the spread of mass education.

Thus we arrive at the imperative for a dual educational system: a brief and second-rate education for many and a relatively expensive schooling for just enough to prevent significant labor scarcity in the capitalist sector. Evidence - 124 - of the dual educational structure is legion. The disparities in expenditures between rural elementary schools and secondary schools or universities bear witness to it. So, too, does the evidence that capitalist under-developed countries chronically under-invest (even in the market-oriented terms of conventional economics) in elementary schooling.

Evidence concerning the relationship between economic structure, class interests and educational dualism can also be found in cross country comparisons of the level of resource allocation to primary education.

I have used a sample of 55 non-communist countries and six communist countries. Thirteen of the 55 non-communist countries were classified as dominated by a traditional elite. While there are numerous borderline cases, and none which fits the ideal type exactly, it is hoped that this classification will capture some of the gross differences in the distribution of power and the interests of dominant groups in the countries of my sample. The non-traditional, non-communist countries are all classified as capitalist.

I have first to predict the level of resource allocation to primary education for the entire sample of 61 countries, using only economic structure variables representing the fraction distribution of the labor force in agriculture and in wage and salary employment. The results appear in Table 1. Equation 1 illustrates the strong relationship between the size of the capitalist sector and the level of resource allocation to primary education. To identify the importance of the political power of my three distinct ruling classes, I have re-estimated the same equation using a dummy variable to distinguish the traditional and communist countries (Equation 2 in Table 1). The addition of the class power variables greatly increases the explanatory power of the equation, suggesting that the class in power is an independent influence upon the educational resource allocation, above and beyond the influence exerted by the economic structure of the society. The signs of the class power dummies are.-as expected, and the coefficients are quant:itatively both large, and significantly different from zero. The positive effect of being a communist country is 91 percent of the mean of the dependent variable for the entire sample. Likewise, the negative effect of dominance by a traditional elite is 21 percent (in absolute value) of the mean for the entire sample. The estimated coefficients of the political variables under- estimate the real impact of class power in the case of the traditional elites, in view of the fact that the preservation of a large agricultural sector and the limitation of the modern vrage earning sector is presumably part of the economic strategy of these elites. Thus, the economic structure variables are not as exogenous. If the share of the labor force employed for wages and salaries or in agriculture were completely determined - 125 -

by the relative power of various classes or elites, then we could let these political variables represent the exogenouE elements in a recursive system in which the economic and education- al characteristics of the society would be determined. To do this, of course, would be to ignore the existence of other influences on the economic structure of the society, such as the natural resource base, , and the peculiarities of the historical development of the country concerned. Using the single equation approach, however, obscures some of the influence of class power, which operates indirectly on educational resource allocation via the determination of the economic structure as well as directly upon the educational allocation decisions within a given economic structure.

TABLE 1

Prediction of Resource Allocation in Education

Dependent Coefficients of independent variables 2 variable (t-statistics in parentheses) R

LFRAG LFRAWE COM TRAD

1) PTPCH -. 0058 .0035 .38 (-2.7) (2.7)

2) PTPCH -.0069 .0020 .0157 -.0035 .67 (-4.0) (2.0) (6.2) (-1.9)

Notes for Table 1

PTPCII = primary school teachers per child of school age in the population LFRAG = log of the fraction of the labor force w.orking in agriculture LFRAWE = log of the fraction of the labor force working for wages and salaries COM = dummy variable set equal to 1 for communist countries, 0 otherwise TRAD = dummy variable set equal to 1 for countries dominated by traditional elites, 0 otherwise - 126 -

The evidence from this sample of 61 countries supports the model of resource allocation in education as thus far elaborated. Yet in the empirical analysis, important influences on educational resource allocation have been excluded. In particular, the adoption of a statid econometric model, the use of cross-section data, and the assumption that at any one time a single class or group is dominant, have directed atten- tion awray from the dynamic development of the educational system in its political context.

The demarcation of class boundaries can never be exact, even in a statis analysis; in the real world, class composition is constantly changing. In the model I have outlined, two com- peting modes of production -- capitalist and precapitalist -- give rise to cormpetition between the dominant classes in each sector. Groups on the margins of power and wealth seek access to higher positions. Poor and excluded groups seek a larger share of income and political influence. An econometric analysis based on the assumed hegemony of a particular class misses these aspects of educational policy which are the ougrrowth of the unresolved conflict bet'ween classes; further, it omits the important diLnensions of educational policy designed to co-opt recalcitrant groups and buy their acciuiescence to the hegemony of the class in power. Thus, for example, the apparent over- investrnent in higher education in capitalist countries relative to primary schooling may be the result not of a conscious plan of income rnaximizing on the part of the dominant group. Rather, it may result from the fact that the families of children which stand to benefit from the expansion of university facilities are often the most politically vocal and powerful groups which have thus far been excluded from the elite. In these cases, university expansion may well be a concession to this politically important and affluent group. Similar pressures occur at all levels of the school system, though as one proceeds downward to primary school- ing, the political influence of the families thus far excluded from access to education is rather minimal.

The use of the educational system to buy off excluded groups may have unintended conseqaences if the expansion of a particular level of schooling proceeds without reference to the demands for educated labor being generated in the economy.

The amount of education demanded and afforded to the population is likely to drift upwards over time. The lottery ticket for a chance of adrnission to the capitalist sector becomes increasingly costly: first literacy, then primary school graduation, then a secondary school diploma, and soon -- for admission to the corporate capitalist sector in the US -- a 2-year college degree. In part this credential inflation is due to the internal contradictions of the school system itself. Demands from the traditional sector workers for the general expansion of the school system cannot forever be safely resisted. Many school systems, for this reason chronically outrun the - 127 - employment needs of the capitalist sector, thus leading to an inflation of the entry requirements in the capitalist sector. This in turn leads to disappointed expectations on the part of the graduates of the system, and their demands (or their parents') for greater access to the next highest level. And so on. ExpZansion of the next level takes these graduates off the labor market, and blunts their discontent, only to reproduce the problem at a higher level when they graduate from the next level up. The potential for social explosion is postponed, but not eliminated, by lengthening the fuse. Where the capital- ist class and other dominant groups use their control over the resource allocation to education to placate dissident groups and to support or forge alliances with groups contending for power, the output of schools and the labor needs of the capitalist sector may diverge at times considerably.

6. Educational Policy and Economic Inequality

I have argued that the roots of inequality in capitalist countries are to be found in the class structure and the uneven development of the economy. The school system plays an essential role: in regulating the labor flow between the capitalist and traditional sectors, in raising productivity in the capitalist sector, and in thwarting the development of a large and class conscious proletariat. Educational policy is thus an instrument in class conflict. As part of a viable political movement which can effectively challenge the class structure and uneven develop- ment of the capitalist economy, educational policy might be used as an instrument for social equality. But to discuss the possible egalitarian functions of schooling in the absence of such a thrust against the capitalist order is worse than idle speculat- ion. It is nothing more than a social and intellectual palliative which has the effect of buying time for capitalism by promising improvement where none can be secured and obscuring the capitalist roots of inequality and oppression. The educational policy most likely to make substantial progress towards equality is that which builds the forces for socialist revolution. - 128 -

Investment in Education in Developing Nations: Conflicts Among Social, Economic and Political Signals

Edgar 0. Edwards,

It has been typical of educational systems in developing nations that they have responded to the most obvious economic and social signals confronting them. So long as these signals were mutually reinforcing, the allocations of substantial development expenditures to education were politically secure, the risk of social and economic error not being one of the obvious signals. Nations achieving independence since World War II (most of the ldc's in Asia and Africa) immediately perceived social and political needs to expand education in preparation for indigenously managed growth--to replace expatriate civil servants and private sector employees, to diminish dependence on foreign training and to meet the normal requirements of growth and replacement. These social needs were strongly reinformed by a pent-up private indigenous demand for education. In these circumstances the rate of educational expansion, particularly at higher levels, was naturally and justifiably in excess of the rate which could be sustained by normal requirements of growth and replacement alone. Unfortunately, as the unusual needs for expatriate replacement and the substitution of domestic for foreign training subsided, many educational systems nevertheless continued their rapid growth, seriously overproducing in terms of the social and economic requirements of normal growth.

The obvious signals today are mixed. The dominant social signal is that there are too few jobs for those emerging from most educational systems,suggesting that a larger share of future development expenditures should go to job creation and that the rate of educational expansion at secondary and higher levels should diminish. The aggregate private demand for secondary and higher education, on the other hand, continues strong, reflecting for the most part:(l) distortions in urban/rural and occupational income differentials which serve to exaggerate the benefits of education as privately perceived and (2) subsidies to education so that only a small proportion of educational costs is borne by the private beneficiaries of education. 1/

In these circumstances of conflict the obvious signals provide no clearcut guide to national educational policies. An "imminent danger" philosophy of government would suggest a first accommodation of educational supply to the visible pressures of aggregate private demand; indeed, growing unemployment is unlikely to reach the clear danger level until a somewhat later date. Evidence on educational expansion over the last two decades in many ldc's is consistent with this hypothesis of political behavior. 2/

The conflict between obvious signals creates, however, a demand for resolution, a demand for more careful analysis of educational needs, benefits and costs. When the obvious signals were mutually reinforcing, such analyses could be treated casually -- as a basis for refining established policy but not as a guide for establishing basic policy. But if at that earlier stage the tools of sophisticated analysis were treated too cavalierly, perhaps today too much is expected of them. - 129 -

The bag of tools is cost-benefit analysis. It is my content%oni that the value of cost-benefit analysis as applied to educational planning lies not so much in its accuracy or indeed in its utility for investment decisions as in the kinds of information it seeks to disclose and in the hints to be gleaned from this information about an extensive array of economic policies extending beyond the educational sector itself. Indeed, if these hints about price distortions and cost incidence are not heeded, the likelihood that cost-benefit-based investment decisions can be implemented is extremely small.

The three elements of cost-benefit analysis to which we call attention are:(1) its effort to embrace all benefits and costs regardless of to whom they accrue or how widely they are shared, (2) its intent to value all benefits and costs in monetary terms and at social rather than private values, bearing in mind that most of the relevant values must be estimated for an array of future dates, and (3) its attempt to find objective-means (discounting) of standardizing benefits and costs for the time differentials related to their occurrence as a means of facilitating comparison. Perhaps such a stark summary makes the principal limitations of cost-benefit analysis all too apparent--to identify all of the benefits and costs of education is a large task; to assign money values to many of them is a hazardous undertaking; to estimate social values where these are not thrown up by the marketplace and when they lie in the future rather than the present is certainly ambitious; and to attempt to compare values across time is a tricky task. Accuracy is not a feasible objective of cost-benefit analysis.

What it does offer is a time perspective and an attempt at objectivity, both of which should improve investment decisions as compared to decisions based on either crude social imbalances or uneven private perceptions of the costs and benefits of education. Crude social imbalances such as unemployment or obvious mismatches between types of education and job requirements are probably not bad indicators of needed policy change and they can undoubtedly be improved upon through analysis of first differences, the rates at which such indicators are changing. But because of the long gestation period in education, decisions on future school output based on present imbalances may obviously turn out to be deficient when measured against future needs. Nevertheless, obvious social signals of these kinds probably deserve considerably more credence in the current circumstances of developing countries than the aggregate private demand for education as a guide to policy decisions.

Aggregate private demand is excessive not only because the incomes associated with higher levels of education often overvalue higher education (partly because differentials established when education was scarce tend to be perpetuated), but also because these benefits accrue to the relatively few who receive higher education while the direct costs (as opposed to opportunity costs) are shared widely through the tax system falling most heavily on those who do not benefit. 3/ Moreover,as the benefits are clearly associated with education and become the private property of the beneficiaries, potential beneficiaries constitute a strong, influential and vocal group favoring educational expansion and the retention of subsidies. - 130 -

On the other hand, because the costs are widely diffused and not clearly earmarked for education, those who bear the costs are stillborn as a political lobby. The voices raised all favor educational expansion. It is not surprising if those who listen in the political marketplace respond-- educational systems expand and costs are subsidized.

It is then one advantage of cost-benefit analysis that it surfaces educational costs for decision makers and relates them to educational benefits. Nevertheless, even if this analysis is persuasive to policy makers, and they are moved in present circumstances, despite the educational lobby, to seek to reduce the rate of expansion of higher levels of education in favor of a more rapid expansion of productive employment opportunities, the problems confronting both the investment decision and its implementation may be formidable.

In the first place, in deciding how to use the funds released from investment in education, policy makers must confront another set of political pressures. Employment creation suggests on the available evidence a dispersion of those funds to rural infrastructure,to small farmers, to decentralized functions of government, and to small scale industrial and service activities in both urban and rural areas, not an indiscriminate allocation of funds to make-work civil service employment at the center or to large, capital intensive forms of industrial and agricultural enterprises. But the effective lobbies concerned with the reallocation of these investment funds are likely to be composed of those who will benefit from large-scale, urban development-- and the policy makers themselves may be members. The promotion of small scale, capital-economizing activities may fall by the wayside, even though they are more productive, in the face of political pressures for continuing capital concentration which is beneficial to the influential. While the social value of reducing the rate of educational expansion in favor of promoting dispersed, small-scale, employment-creating activities may be reasonably clear, the social value of shifting funds from education to capital intensive, large-scale undertakings may be a matter of considerable doubt. In the second place, even if policy makers make the right social decision on reallocating investment funds, the political pressures which inhibited that investment decision will continue unabated, and indeed may grow in force and magnitude. There is nothing in the investment decision itself which will modify the price signals determining the private demand for education or the demand of the influential for capital intensive projects. These continuing pressures may frustrate implementation, turn policy makers out of office or force a reversal of the decision. Indeed, some within both local and central government who disapprove of the decision may assist in circumventing it, as in the early years of the Harambee school movement in Kenya. 4/ In any event, the decision will entail the rationing of educational opportunities and a conseauent opportunity for discrimination.

In the third place, the decision relates only to public investment and its implementation nationallylas opppsed to only in the public sectors implies means of enforcement which extend into the private sector. Secondary and higher education is not a public good in the sense that its benefits - 131 -

cannot be resold by the beneficiaries; it follows that profits mav be made by those who supply educational services. In these circumstances the tendency exists for the aggregate private demand for education to spill over into the private sector and for enterprising entrepreneurs to find means for supplying it, as in the PIrlippines. 5/ A decrease in public investment in education may simply lead to an increase in private investment and so long as the price signals determining aggregate private demand are distorted, aggregate private and public investment in education will continue to be socially excessive.

This analysis leads me to conclude that the making of "socially- correct" investment decisions with regard to education, whether on the basis of crude social signals or more refined cost-benefit analysis, will not in and of itself alleviate, and indeed may aggrevate, the political and economic counter pressures stemming largely from a distorted private demand for education. Moreover, if unpopular decisions are in fact taken in the face of such pressures, the obstacles confronting effective implementation in both public and private sectors will seriously distort the desired outcome. 6/

The alternative is to look beyond the investment decision itself to those policies which will tend to make conflicting social, economic and political signals converge, mainly by modifying the private demand for education. Such policies fall in three categories:

1. Policies to adjust labour market price signals and hiring practices so that market price differentials accord more closely with social realities (shadow price differentials) and education is not overvalued.

The use of shadow prices for decision making is usually implicitly premised on the existence of control mechanisms which transcend the market, as in allocation decisions internal to the firm. The rationing of educational opportunities is usually discriminatory and in any event may only squeeze unsatisfied private demand into the private and local govern- ment sectors. The policy adjustments referred to here are therefore desirable whether education is supplied in either the public or private sector or in both.

2. Policies to recover from the beneficiaries of higher education a greater proportion of the costs of providing it in the public sector.

That part of education which is not a public good, its benefits becoming private property whose services can be marketed, should be financed by the beneficiaries out of future income differentials or through public service. Such policies should diminish discrimination by parents' incomes (the beneficiary pays), temper the private demand for education, and recover a portion of educational costs for other public sector purposes. - 132 -

3. As an alternative or supplement to (2), policies to encourage the supply of "private good" higher education in the private sector.

Such policies will ensure that the costs of private-sector higher education enter the private calculus. The disadvantage is that, unless such policies are supplemented by a public sector loan program, the distribution of the benefits of private sector education will depend heavily on parents' incomes, rather than on the prospective incomes of the beneficiaries of higher education. - 133 -

Footnotes

1. For a more extensive and rigorous discussion of the conflict between the need for jobs and the demand for education and of the rationing dilemma this conflict raises, see E.O. Edwards and M.P. Todaro, "Educational Demand and Supply in the Context of Growing Unemployment in Less Developed Countries", World Development (March-April, 1973).

2. See, for example, the illuminating evidence of such behavior in the U.N.I.L.O. report, Matching Employment Opportunities and Expectations: A Program of Action for Ceylon (Geneva 1971).

3. An excellent exposition of this and related issues can be found in Jagdish Bhagwati, "Educati6n, Class Structure and Income Equality", World Development (May 1973).

4. See the U.N.I.L.O. report, Employment, Incomes and Equality (Geneva,1972).

5. See the report of the Presidential Commission to Survey Philippine Education, Education for National Development: New Patterns, New Directions (Manila, 1970).

6. For a discussion of the limited extent to which educational decisions alone can contribute to a restructuring of society, see E.O. Edwards and M.P. Todaro, "Education, Society and Employment: Some Main Themes and Suggested Strategies for International Assistance Efforts", World Development (forthcoming). - 134 -

ON ALLOCATING RESOURCES TO EDUCATION

Arnold C. Harberger

These notes are concerned mainly with the problem of determining the overall size of the education sector, rather than with the allocation of funds to various subcomponents of it. Nonetheless, the approach employed implicitly contains some elements of the intra-sectoral allocation problem, in the sense that it deals with social rates of return to investment in education, which normally involve comparisons of age-earnings profiles of two different educational levels. A high rate of return to technical secondary education, for example, would be a clear signal that not enough resources were being devoted to that particular branch of education; it would not in itself be an indication that too few resources were being devoted to education as such. For our purposes, it will be convenient to suppose that some sort of optimizing procedure is already being used to determine resource allocations within the education sector, so that gross differences in the economic rates of return to the different types and classes of education are avoided. Thus, when we speak of "the" rate of return to educational investments, we will have in mind the notion that this rate of return applies, at least in a rough way, to all of the rele- vant margins to which incremental funds allocated to educational activities would be applied.

(Some educational investments, however, may have substantially higher social yields, but where this is the case, they are assumed to be infra-marginal. For example, primary education might have a social yield of, say, 30 per cent per annum, which is high because of the absence of foregone earnings as a relevant cost, and because the real costs of teachers, buildings, supplies, etc. are themselves not very high at the primary level. At the same time as investments in primary education are showing a 30 per cent yield, however, those in secondary and university education might be around 12 per cent. The economic signal here would seem to be loudly calling for more investments at the primary level. But once primary education was essentially universal, a 30 per cent measured yield on that level of education could coexist with a 12 per cent yield on investments in higher levels, without implying underinvestment at the primary stage. In such a case, the relevant margin would be an expansion of education at the secondary and university levels; this is where increases in budget allocations would normally be expected to go, and cuts to come from.)

With this background, let me now turn to a brief review of one of the major controversies in the field of educational planning. On the one side of this argument we have the "manpower planning approach," which in essence asks how many educated people (of each type and class) we expect will be "needed" over a specified future horizon, and which then plans an - 135 -

educational investment program to fill the needs thus defined. On the other side we have the "rate of return approach," which does not concern itself much with quantitative targets, but simply takes a high measured rate of return on educational investments (relative to that on physical investments) as a signal to expand activity on the educational side. Without getting embroiled in technical niceties at this stage, I think it is fair to identify the manpower planning approach with an implicit judgment or assumption that the function relating the yield on educa- tional capital with the total stock of such capital is relatively inelastic, and tc associate the rate of return approach with the idea that this same function has a rather high elasticity.

I realize that these characterizations of the two approaches are oversimplified - perhaps to the point of being caricatures rather than accurate representations of them. Nonetheless, I think that there is a real sense in which they are quite apt. Those who concentrate their attention on quantitative targets and do not consider measured yields on educational investments to be very important pieces of information are, at least to my mind, implicitly saying: (a) that it is relatively easy for us, if we proceed without due caution in our planning, to end up with significantly too much or too little educational capital, and (b) that the rates of return that we measure at one point in time can very easily be different at a relatively near future point, and hence are not particularly useful guides in developing an educational plan or strategy. Both of these implicit judgments make a lot of sense if the relevant function is quite inelastic, and seem wide of the mark if the opposite is the case. On the other hand, the notion of precise quantita- tive targets does not itself make much sense when the relevant yield function is highly elastic.

In what follows I plan to look at the controversy between these two points of view in the explicit context of social cost-benefit analysis. In the process, I shall also "embroider" my initial characterization of the two positions with a few judgments about key facts that are likely to apply in most real-world applications. Let us take first the rate-of-return approach. This is clearly the more optimistic of the two, at least once it is recognized that most measurements of the rate of return to education yield estimates that are either above the corresponding rates for physical capital investments, or at least not very far below them. Where the measured rates of return are above those for physical capital, there is hardly any question but that they point toward a significant expansion of educational investments, once the assumption of a highly-elastic yield function is accepted. Where the measured rates for education are lower than those for physical capital, the case is not quite so clear. Here the problem arises of assessing the benefits of education that are not incorporated in the standard rate-of-return measurements - i.e., (a) the direct consumption beneiits of the individuals concerned during the - 136 -

educational process (going to college is more fun than working), (b) their direct consumption benefits later on (an improved general cultural level can provide increased enjoyment in later life), (c) their increased "efficiency" as consumers (educated people will generally be able to use a given budget more wisely or prudently than the uneducated), and (d) the positive external effects that education implies (the educated will normally be better informed citizens, will take more interest in the welfare of their conmunities, will be able more efficiently to absorb and process information, etc., etc.). These points create a presumption that the equilibrium measured yield on educational investments should be somewhat below that on physical capital investments, for which the presumption of significant, positive non-measured external effects is not strong. How an educational planning group should appropriately respond to a situation in which the measured rate of return to education falls short of that to physical capital would depend upon the size of the shortfall and upon its judgment as to the magnitude of the non-measured effects listed above. Yet my impression of the facts is that measured rates of return to education rarely fall very far short of those to physical capital, and that most people's appreciation of the magnitude of the non-measured effects is that they are quite substantial. So long as this is the case, even a plausible shortfall of the measured rate for education should not be regarded as a "stop light" for further educational investments. Perhaps it could be viewed as a caution signal, but even this modest degree of pessimism may not be necessary if indeed the yield curve for educational investments is highly elastic. (If the yield on physical capital is, say, 15 per cent, and that on educational investments is 10 per cent, and if the difference of 5 percentage points is taken to be compensated by non-measured net benefits of education, then why be cautious about expanding on the educa- tion front, as long as one feels confident that the 10 per cent yield will not fall significantly as a consequence?)

But there is also a second point to be made in connection with the rate-of-return approach. Once the rate of return to educational capital has reached a level where it is judged to be (after appropriate adjustment for non-measured benefits) comparable to that on physical capital, then the appropriate attitude for the educational planner would be one of more-or-less indifference with regard to the pace at which educational investments are expanded. This, after all, simply translates into words the meaning of a highly elastic yield curve when the yield is comparable to that on the relevant alternatives. Under the conditions here postulated, there are neither any outstanding extra benefits to be achieved through rapid expansion of the educational effort, nor are there any great costs involved in proceeding instead at a slower pace.

The situation is different under the "manpower plarning" approach as I have characterized it. Here the relative inelasticity of the yield curve means that substantial costs can be entailed in being on either side of the optimum. If too much investment is undertaken, some share of the incremental funds thus allocated is wasted, in the sense of its generating - 137 -

a social yield significantly below that which could be obtained from alternative applications of the same funds. And if too little is invested, the foregone product is substantially higher than that yielded by the relevant alternative uses of funds. So the inelasticity of the yield curve basically negates the idea of more-or-less indifference, referred to above.

Here, however, I would like to embroider the basic notion in a somewhat different way. As far as I can see, there is likely, even if we accept the general line of reasoning that leads people toward the "manpower planning" position, to be a considerable asymmetry between having too much investment in education on the one hand, and too little on the other. Perhaps the analogy with investments in electric power is an apt one. I not only can easily imagine, but have actually seen, in several less- developed countries, cases where a lack of adequate power has stood directly in the way of GNP growth, in the sense that it has prevented the timely opening of new factories, has forced cutbacks of production from existing ones, etc. It is quite possible that a true measure of the marginal social yield of additional investments in such cases would be perhaps 50 to 100 or more per cent per annum, rather than the, say, 15 per cent which represents the social opportunity cost of capital in general to the economy in question. On the other hand, suppose that in the same economies there was a symmetrical over-investment in power facilities. It is hard to believe that this would drive down the marginal social yield on investments to -20 or -70 per cent (symmetrical, around a 15 per cent norm, with the +50 and +100 per cent figures cited above). Surely the extra power could be put to better use than this - keeping people a little cooler in summer and a little warmer in winter, for example. As far as I can make guesses about the demand for power investments, it can get quite elastic in the 3 - 5 per cent range of yields, even though it is quite inelastic in the range of yields of 20 per cent and over.

I think the case is very similar with respect to educational investments. Where we have too few, the whole process of economic growth can be impaired - not enough teachers to man the schools, not enough doctors and nurses to keep the population reasonably healthy, not enough engineers and skilled technicians to build and run the factories, etc. But where we have too many, the costs are not symmetrically large. Rates of return (as measured) seem never to be driven down into the zero to negative range, and surely are never dramatically negative (as many measured returns are dramatically positive when there are shortfalls of human capital). IEelieve that we can therefore count on a relatively ample elasticity of the yield function for educational investments, as the yields get low. We can always get some positive yield frcm improving the skills of our farmers and craftsmen, and there are always also some non-measured benefits of the types previously listed. - 138 -

The asymmetry just alluded to calls for a bias, in educational planning, toward having too much rather than too little, just as an asymmetrical loss function calls for a corresponding bias in any problem in decision theory. If this line of reasoning (with its implied judgments of the relevant facts) is accepted, it would take much of the heat out of the controversy to which this paper is addressed. Indeed, on this view, it is the manpower planners who would in a sense become the optimists regarding educational investments, since they would want above all to avoid the high social costs of having too little and would presumably be willing to bear the moderate social costs that the asymmetric approach would assign to the possibility of having too much. In more practical terms, I think that we should not begin to worry about whether we might be getting too much education until the measured rates of return get into the range of, say, 5 to 10 per cent (in the typical LDC), and only really get seriously worried when those measured rates begin to fall below 5 per cent, and approach the zero-to-negative range. My guess is that the day when we see these danger signals will be far, far in the future for most LDC's. - 139 -

EUCATION AIM SOCIETY IN DEVELOPING NATIONS: CONCEPTUAL RELATIONSHIPS AND EMIERGING OPPORTUITIES

Edgar 0. Edwards and Michael P. Todaro

Education and Society

(1) The nature of an educational system is determined primarily by the nature of the society it is intended to serve. When properly designed and managed, however, education itself has a potential to influence and move that society in useful directions. By and large, educational systems respond quantitatively, structurally, and qualitatively to society's aggregate private demand for education.* This demand in turn is influenced mainly by the structure of the economic and social incentive system and the socio-political constraints operative in that society.** In a growing number of LDC's these incentives and constraints are in a process of constructive change. As a result, educational systems today face the challenge of adapting to the emerging new qualitative requirements deriving from a conceptualization of "development" which now stresses equity as well as growth.

A New Climate for Educational Innovation

(2) During the last two decades, governmemts in less developed countries have been concerned with expanding their educational systems to meet the urgent manpower demands of development and independence. As a consequence, crash programs have been required resulting in rapid enrollment growth at all educational levels - needs to which donor agencies have responded with massive amounts of financial and technical assistance.

(3) At the same time that donor agencies were assisting the rapid, quantitative expansion of education, they were also supporting accelerated industrialization and expanded public services in urban areas. What was not then apparent but is now recognized is that this urban, modern sector bias in economic activity created occupational and urban-rural differentials in incentives, which contributed to a related bias in educational systems, i.e.,

* By "aggregate private demand" we mean the sum total of society's individual demands for educational services, given the prevailing structure of private costs, perceived benefits, and socio-political opportunities of procedure through all or part of the educational system.

** Economic incentives include urban-rural differentials in wages and job opportunities, occupational wage differentials, and the relationship between job access and educational credentials. Examples of socio-political constraints include discrimination in job access, limitations on upward mobility due to caste restrictions and preferential treatment related to status and wealth. - 140 -

a strong orientation toward the educational needs of the modern urban sector. Donors need to be more mindful in the assessment of their non- educational projects in agriculture, industry and the public sector of the biases they may impose on the education system.

(h) The attainment of the most urgent quantitative goals in education and the growing concern about the urban, modern sector bias in educational systems are both factors contributing to the current redefinition of educa- tional priorities. Many policy makers in LDC's are now raising serious questions about the relevance, internal effectiveness and equity of their educational systems and demanding more careful analysis of the quality of education in relation to a wider perception of development needs. The new set of educational priorities likely to emerge from this reassessment will require of donor agencies over the next decade a much more imaginative, selective, innovative, and sophisticated response than has been required of them in the past.

(5) If we interpret this evidence correctly, the decade ahead promises opportunities to learn about the innovate with educational systems in ways which differ significantly from those associated with the past period of rapid quantitative expansion. Donor agencies must be prepared to respond sympathetically and constructively to these new opportunities and indeed should regard the planning and evaluation of their own projects and programs as an integral and important part of the process of learning how to improve educational systems. The new climate calls for change and innovation on a scale which was not possible in the circumstances of the last two decades.

The New View of Development

(6) Traditionally, "development" has been associated with high rates of growth in aggregate and per capita incomes. Recently this narrow defi- nition of development has been challenged and increasing emphasis given to other dimensions such as employment opportunities, income distribution, the provision of social services, and the alleviation of poverty. Similarly, this wider view of the meaning of development has led policy makers to evaluate education not only by its contribution to growth but also by its effects on poverty, employment, and income distribution. Donor agencies must in turn display a growing concern with these issues and expand their criteria for judging educational projects and programs to embrace these wider concerns. Many projects which met the simple "growth" needs of the past may be difficult to justify in terms of the more balanced criteria emerging today.

The New View of Education

(7) In the past, too much was expected of formal education as an engine of development, and it in turn was often blamed for social deficiancies beyond its control. The more realistic view which is emerging suggests that learning results from the whole array of social experience of which formal education - 141 -

comprises but one subset. There are many forms which learning can take. They include formal, in-school, academic, or vocational education; non- formal, out-of-school, but organized services; and also informal means in which learning is a by-product of such environmental influences as the family, ,the range of work experiences, and recreation. The point is that organized education is not the only means of learning, and indeed some argue that it may not even be the most important from the developmental point of view. This suggests that donor agencies must be concerned through- out the whole range of their assistance activities (including education programs) with the learning experiences that these activities provide as a by-product. For example, employment-generating assistance projects, while not technically identified as educational investments, might nevertheless have a powerful learning impact. The Interaction between Education and Development (8) The stage of social and economic development affects the confi- guration of demands placed on a nation's educational system and the resources which can be allocated to it. A country must be realistic about what is expected of its educational system and about what resources can be marshalled in its support. The educational system, on the other hand, may at any stage of development reinforce existing social constraints and inequities or be a positive force in promoting wider participation in the benefits of growth. Nevertheless, it is unrealistic to expect the educational system itself to play a major role in directly redressing inequities which stem from factors outside of its control, namely distorted incentive systems, malfunctioning labor markets, and the political abuse of power. However, as pointed out by the task force report on Universities for Development, within the educa- tional system universities can play a powerful role in articulating the nature and causes of underdevelopment and suggesting possible solutions to specific development problems. Donor agencies should tailor their assistance programs to the stage of development of recipient nations and should give serious consideration to biasing their assistance in favor of educational strategies which are both more equitable and developmental in character. Moreover, in assessing non-education projects, donors should consider the effects these might have on reducing existing social-and economic imbalances (e.g., urban-rural) and thus modifying incentives in ways that might stimu- late educational development in peripheral areas. In the long run, non- educational projects which stimulate more widespread geographic and occupational distribution of economic opportunities will alter the incentive structure and have a more permanent, progressive effect on the orientation of the educational system than direct attempts to modify the system without supportive changes in economic incentives. For example, it is hard to imagine a program of education for rural development being effective in the absence of meaningful and rewarding job opportunities in rural areas and a reduction in the present imbalance between urban and rural real incomes. - 142 -

Internal Effectiveness of Educational Systems

(9) While recognizing that the overall orientation and structure of the educational system tends to be shaped by the multiple dictates of aggregate private demand, the system itself can operate as a feedback mechanism to influence the nature of this demand, hopefully, of course, in the direction of genuine developmental needs. Consequently, the internal effectiveness of the system can be evaluated both against the efficiency with which it meets a given aggregate private demand, however distorted, and the degree to which the system in its internal behavior provides a con- structive example for the rest of society. To be internally effective vis-a-vis "private" demand, the educational system should provide the services demanded and minimize the costs of doing so through various peda- gogic and technological mechanisms. But the system can also be judged "effective" against the standards of "social" demand.* Within the scope of its authority and again, of course, at minimum cost, the educational system should set a socially constructive and influential example by: (1) selecting and promoting students by non-discriminatory objective criteria; (2) designing curricula which will best prepare students to function effectively in the society at large; and (3) insuring that exit credentials reflect, insofar as possible, the students' real qualifications for productive activities. Many promising opportunities for donor agencies to assist with educational innovation in the coming decade will relate to research and experimentation with these several aspects of internal social effectiveness. The ultimate significance for development of such internal innovations will depend on the extent to which the educational system itself is both responding to and influencing external aggregate private demand in ways which accord closely to the real human resource needs of the nation.

Education and Employment

(10) In many developing countries the generation of employment oppor- tunities has become a major priority objective. The rapid expansion of formal education in conjunction with inadequate growth in new job opportunities is creating growing numbers of educated unemployed. Much of the investment directed towards the quantitative expansion of formal education, especially at the upper levels, is an investment in actual or potential idle human resources, resulting in a use of limited development funds which poor countries can ill afford. Both LDC governments and donor agencies must decide to what extent they are prepared to allocate their limited financial resources to the further rapid quantitative expansion of post-primary education as opposed to applying more funds to creating employment opportunities for those presently in the educational pipeline. The following paper by the same authors devoted to the interrelationship between education and employment deals with these and other issues in more detail.

Education and Equity

(11) In addition to criteria of developmental relevance and internal effectiveness discussed above, more and more criticisms of educational systems find their roots in the inequitable distribution of educational

* Aggregate "social", demand is that which would prevail if there were no distortions in private economic incentives and costs and no socio-political constraints. In the absence of these distortions and constraints, aggregate "private" and "social" demand would be equal. - 143 -

opportunities. The argument runs that: (1) the wealthy and politically influential often have preferential access to education, either through ability to pay fees and related educational costs, or, at levels where entrance is rationed, through the attainment of admission on bases other than merit; (2) the educational system tends to cater to an urban-cum-modern sector bias and in its choice of curricula to the perceived needs of those who hope to benefit from growth in this sector; and (3) in view of (1) and (2) and the fact that education is usually financed out of general tax revenues (which are often regressive) with public subsidies accruing to the favored groups in increasing disproportion at progressively higher educational levels, most educational systems involve income transfers from the poor to the rich. It follows that the educational system which, in principle at least, is open to all classes, tribes, and castes can in reality provide a political cover for income transfers which widen the gap between the rich and the poor. There is evidence, however, that an increasing number of countries are becoming concerned with finding ways to reduce the inequities inherent in their educational systems. Donor agencies that share these views may want to give priority in educational assistance to supporting innovations with favorable equity implications.

Summary and Conclusions

(12) We interpret the new climate for educational development as one which will induce governments to be both more selective and more innovative in their choice of educational projects and their search for system modifi- cat-ions. The diminishing need for rapid quantitative expansion, the growing concern over the urban modern sector bias of educational systems, and the redefinition of development objectives are all contributing to a fundamental reassessment of the role of education in the development process. Increasingly, educational systems are regarded less as "Tengines of development" and more as institutions which respond with varying degrees of internal effectiveness to the demands placed upon them by the societies in which they function. In many LDC's, the aggregate private demand for education, which exerts powerful political pressure on supply, does not reflect the real development needs of the nation because of the distorted economic incentives and the social and political constraints by which that demand is determined. In the absence of fundamental changes in these incentives and constraints (and therefore in aggregate private demand), any attempt to serve genuine development needs by restructuring the overall educational system has little chance of success.

(13) This is not to deny that selective innovations at critical points within the system (e.g., the universities and the primary school curricula) can by changing attitudes and understanding of the development process exert long-run pressures to alter the incentives and, more likely, the constraints. But again it is too much to assume that education will play a determining role in this process. (14) While donor agencies also cannot directly influence these incen- tives and constraints, they can over time exert pressure for positive change through careful selection of non-educational assistance projects, for example, by focusing more on integrated rural development programs and infrastructure projects which do not require sophisticated technologies. At a minimum, donors should be cognizant of the educational implications of their non-educational assistance efforts.

(15) In the field of education per se, there are important opportunities for donor agencies to assist developing ciuntries to improve the internal effectiveness of their educational systems. In assisting with such efforts, donor agencies should give greater priority in designing, selecting, and evaluating projects to the learning potential implicit in them. By pooling this knowledge and sharing experience through some mechanism such as the International Reporting Service proposed at this meeting, policy makers in donor agencies and in the developing countries can be kept abreast of current developments and most recent experiences.

(16) Assistance agencies should set themselves the goal of learning from their own work, and thus contributing over the next decades a signifi- cant increase in knowledge about the internal dynamics of educational systems. Future assistance programs can better serve the needs of developing nations if they are converted from simple replication mechanisms to positive means for advancing understanding. - 145 -

RAPPORTEUR'S COMMENTS

The central thesis of this paper is that the abstract liberal view of the state - as exogenous and egalitarian - is erroneous. On the contrary, it is argued that the state serves to stabilize or reproduce social relations in the interests of the capitalist class and other -dominant groups of society. The educational system is one of the main instruments of state power in performing those functions through its influence on political behavior and social aspirations.

During the presentation of his paper, Professor Bowles empha- sized the fact that no policy discussion can be abstracted from political analysis. He elaborated on the notion of dualism - urban versus rural, capitalists versus wage-earners - and reached the conclusion that "the social relations of schooling reproduce the social relations of production in each age group. The class structure is also reproduced from generation to generation."

Professor Dore mentioned the gap between equality of opportunity and equality in the society. The case of Japan where a relative equality of opportunity did not succeed in creating equality of social roles was described as a typical example of a country where meritocracy did not result in equality.

Dr. Gulhati recalled that to say the state is always controlled by the "capitalist class" is an over-simplification. The concept of a neutral state open to technical solutions cannot be disregarded.

Professor Blaug wondered if it was possible to apply Professor Bowles' two sector models to education analysis. The various interest groups involved in the shaping of educational policies - teachers, parents, administrators - may have conflicting objectives. He could not see how these objectives could be included in the model.

Mr. Alhuwalia expressed concern that the model was primarily a model of conflicts of interests at a very general level. It did not build in the role of education in any very useful way.

Dr. Hultin said that, according to Swedish experience, the school system cannot do much to generate equality but can be designed in such a way that further increases in unequality are prevented. He suggested some practical measures to achieve this, such as preference for student loans over student salaries, elimination of competitive grading, no ability streaming during the first nine years of schooling, adoption of a quota system for university entrance.

Professor Carnoy disagreed with the fact that primary education is under-expanded: capitalists find it worthwhile to invest in primary education as a control mechanism for industrial society. - 146 -

Professor Bowles stressed the fact that his model requires firther elaboration prior to being applied to any particular country's educational policy alternatives. He strongly argued that: (i) there is no class conflict without class consciousness, and (ii) education is essential in thwarting the development of working class consciousness.

* * * * * * *F * *

Professor Harberger's paper attempts to shed new light on the decade-old controversy about manpower planning versus rate-of-return planning. His main contribution is to argue about "asymmetry" in edu- cational planning - meaning by this that it is better, or at least safer, to have too much education rather than too little. In practical terms, the advice is that one should not begin to worry about whether we might be getting too much education until the measured rates-of-return get into the range of, say, 5 - 10 per cent, and only get seriously worried when those rates approach the zero-to-negative range.

Dr. Edwards' paper postulates that: (i) rates-of-return evidence shows there is too much secondary and higher education in LDC's and (ii) (unpopular) policies aiming at increasing the price of education and/or fostering the development of private education should be implemented.

The discussion on these two papers was rather disjointed. Nevertheless, many speakers expressed their skepticism about rates-of-return as tools for intersectoral allocation of resources as long as no signifi- cant breakthrough is expected on the quantification of externalities. Thus, if the efficiency argument is downgraded, equity considerations are bound to play a more vital role in education decision-making than in the past.

Though rates-of-return cannot be used for intersectoral allocation of resources, they remain useful analytical tools for intra- sectoral allocation (within levels of education). Even there, the reasons brought forward by Mr. Edwards to decrease the private rates-of- return to secondary and higher education by increasing the price of education failed to convince many speakers. Most of them agreed that something should be done to avoid inequity; i.e., income transfers from the poor to the rich through the public provision of education. But, at the same time, emphasized the need to avoid any policies that would jeopardize educational opportunities and long-term equity.

Mr. Jean Pierre Jallade - 147 -

EDUCATION, POVERTY, AND DEVELOPMENT

Page No.

I. INTRODUCTION ...... a...... 150

Structure of Learning ...... 150 Alternative theories . 151 Data .155 Education, Poverty and Development: An Overview.. 155

II. MAJOR FEATURES OF THE EDUCATIONAL SYSTEMS ...... 157

Objectives ...... 157 Investment .o...... * * . *** 158 Output ...... *...... 159 Internal Efficiency ...... * 161 Benefits and Return on Investment ., 167 Employment ...... 168 Income Distribution ...... 177 Other Features ...... o...... f79

III. MAJOR ISSUES IN FORMAL EDUCATION ...... 181

The resource constraint ...... *. 181 Ineffectiveness ...... 182 Inefficiency . . 183 Inequality. . . 18 Reform ...... 186

IV. TOWARD OPTIONS FOR A NATIONAL STRATEGY .o*.oo 187

Phase I: Awareness and Transition ...... 189 (a) Demand for knowledgeable manpower ...... 189 (b) Supply of skilled manpower ...... 190 (c) Design for increased equity ...... 190 (d) Resources for transition ...... o. 190 Phase II: The Return to Learning ...... - 191 (a) Motivation for reform ...... 191 (b) Information for innovation ... -. ... 192 (c) Technological and legal change ...... 193 (d) Political economy of reform 194 - 1)48 -

Page No.

A Best Guess .... *...... 195

Conclusion ...... 197

TABLES

1. Public Expenditure on Education 2. Primary Wastage Rates 3. Secondary Wastage Rates 4. Wastage Rates by Primary Grades 5. Public Expenditures per Student 6. Tunisian Expenditure per Graduate 7. Social and Private Rates of Return by Educational Level 8. Salaries by Level of Education 9. 1954 Graduate: By Year in Which First Employment was Obtained 10. Socio-Economic Status of Students, Father

Diagrams 1. The Learning System: Causes, Consequences and Interaction 2. Average Annual Rates of Growth of Enrollment Ratios Primary, Secondary and Higher Education 3. Age Earnings Profiles for India

ANNEXES 1. Index of Enrollments, Selected Countries 2. Ratio of Enrollments to School Age Cohorts 3. Average Annual Enrollments and Enrollment Ratios 4. Public Expenditure on Education as Percent of GNP 5. Public Expenditure on Education 6. Average Wages by Sector, Selected Countries 7. Primary Education and Kloding Competeria 8. Public Expenditures per Student 9. Public Expenditures per Graduate 10. Education and Income Distribution in Brazil EDUCATION, POVERTY, AND DEVEOPMEIT

John Simmons*

The poor are not educated to see their interests, and they are not organized to fight for their interests. - Gunnar Myrdal

To what extent does investment in formal education contribute to economic growth and development? What are the relationships among education, employment and income distribution? What percentage of a developing country's GDP should be spent on education? To what extent can formal education educate the poor to see their interests and to fight for them. These are some of the questions that arise when investment in education is discussed. Our review of these and related questions will suggest that there are more questions than answers. But even given this uncertainty, the main thrust of this paper is to suggest that we have sufficient evidence to indicate that educational investment in developing countries requires major redirection. If investment in learning is to increase its contribution to development, then we first need to change the way we have thoug&t about it in the past.

One purpose of the paper is to suggest appropriate policy options for investment in education. While the discussion of issues and options is based on the research literature, field observations and interviews, it is not a review of the state of the art. 1/ It is an attempt to define and focus the debate on investment choices. Basic to formulating a new strategy is finding ways to ask the right questions. Only with a new set of questions can the rich and poor in developing countries elicit the information needed to decide for themselves what their educational investment strategy should be.

Section I of the papers reviews a systems approach to learning, related theories and data. In Section II we explore the range of features of educational systems. Data is used from both developed and developing countries. This exploration raises a number of issues which are treated in Section III. Approaches to educational reform and strategy options shape the firnl Section IV.

* This paper is a collaborative effort and reflects the ideas of individuals both in and out of the Bank. The extensive and useful comments by more than 30 members of the Education Department/CPS, Regional Education Divisions and the Development Policy Staff on an earlier draft are ap- preciated. These individuals are not responsible for my commissions or omissions. 1/ The relevant liVerature on investment in human capital covers the social and health sciences with particular emphasis in economics, psychology, sociology, nutrition and education. See the bibliography for selected reading in these fields. - 15o -

All readers of this paper are "experts" on education because of their experience. Thus, readers bring a more complex set of biases than usual to our analytic task. For those of you who have not spent significant time recently observing classrooms, talking to teachers and students and reading the work of educational observers, we urge you to become reacquainted with the facts beyond those supplied in this paper.

I. Introduction

The analytic approach of this paper has several levels. At one level the basic features of educational systems are reviewed, the central issues for future investment defined and some guidelines for strategy pro- posed.

At another level are the theories of human capital formation and the optimal mechanisms for intervention. While we know the optimal propor- tions of capital and labor to make steel, we do not know with the same preci- sion how people learn. If we did, there would not be the constant debate over optimum learning technologies and reappearance of methods discarded decades ago, like rote learning reappearing in teaching machines. At the final level, and simultaneously, we apply neoclassical economics to explore the efficiency of the production (learning) process, the effect that educa- tional investments have on the productivity of human capital, the economic growth of nations, and finally the effect that educational investment has on the distribution of income.

Some important issues, like education as a human right or educa- tional administration, are not analyzed because of our desire to focus on the economic questions of efficiency, effectiveness and equity. By using this analytic approach we unfortunately raise more questions than we have immediate policy answers.

Several definitions are required to lend precision to the discus- sion. Schooling and formal education refer to what is taught in school and school-related exDeriences, such as sports teams and theatre groups. Educa- tion without an adjective refers to learning that can take place outside the school as well as inside. Nonformal education refers to organized educational activities that occur outside the school, such as adult 1l.`.er1acy courses and agricultural extension services. Learning that is not organized can be termed informal education and includes all forms of nonschool experience.

Structure of Learning

The definitions suggest that investment in education (without an adjective) has important implications for the nonschool inputs. Countries have tended to limit their systematic investment in education to only the formal and nonformal areas. Mass media, activities of political parties and measures to Alter the family environment have been less frequently used as systematic tools for changing attitudes and behavior of either the young or the old. The diagram on the next page outlines the input/output dimensions of a learning system. These dimensions are meant to be suggestive, not ex- haustive. Several features of the diagram should be noted: first, the im- portant range of early factors, virtually all of which are now considered outside the scope of either formal or nonformal education in the poor coun- tries; 1/ second, the important interactions (feedback loops) that provide positive or negative reinforcement to behavioral change; third, formal and nonformal schooling appears as only two of the many factors in promoting behavioral change and benefits; and fourth, the diverse range of the outcomes of schooling.

The input/output relationships and their relative importance have been quantified for some societies and will be discussed in Section II. But before discussing this, it is important to explore the possible reasons why the formal system of education has become so important in both poor and rich countries. Mass education was virtually unknown in the world 150 years ago. 2/

Alternative theories. Three basic theories - the human capital, the progressive and the structural - are used to describe the effect of edu- cation on individuals and on the economy, and the interaction between them.

Human capital theory suggests that an investment in education increases labor's productivity by embodying in that labor increased skills and knowledge. 3/ While different methods are used to measure human capital, they all are based on the cognitive effects of education. The other two theocies stress the noncognitive outcomes of schooling. In accordance with the neoclassical utilitarian paradigm, individual preferences are considered fixed or outside the realm of economic analysis. They are considered inputs, not outcomes, of economic processes. While preferences may change over time, consumption, investment and work preferences are not the outcomes of social institutions such as schools or individual experiences. The policy implica- tion of the theory suggests that increased amounts of schooling for indivi- duals with low schooling will increase their wages and also reduce social inequality.

1/ For reviews of some exceptions, see Smilansky (1967), Coombs and Ahmed (1964).

2/ cremin(196 5)

3/ For an early exposition of this concept see Walsh (1935) and further refinements by Schultz (1961) and Becker (1964). DIA1kGRAMd T _ 15 _

THE LEARNING SYSTEM: CAUSES, CONSEQUENCES, AND INTERACTION

LAllLY FACTORlS I AT[ 1i FACIORS BEHAVIORAL CHANGE HENLII rs

INUIVIDUAL PRENATAL POST NATAL INFECTIOUS DISEASE PRODUCTIVITY PARASITIC DISEASE .MALNUTRITION E S JOB PROMOTION PERSONALITY EMPLOYMENT STATUS MOTOR SKILLS SCHOOLING SOCIAL MOBILITY ,INTELLIGENCE \ COGNITIVE SATISFACTION NONFORMAL SOCIALIZATION FAMILY PARTICIPATION - INCOME NONCOGNITIVE OCCUPATIONAL STATUS NO SIBLINGS INFORMAL MODERNIZATION EARNINGS

- CHILD REARING BEHAVIOR HOUSING _____ POLITICAL STABILITYICHANGE

NON-FAMILY ENVIRONMENT GEOGRAPHIC LOCATION - - - -___J PEER GROUP SANCTIONS .LEGAL .SOCIAL

NB.. Other arrows are omitted to maintain the clarity of the diagram. For example, Family and Non-family Environment should have dotted lines to Later Factors and Behavioral Change. World ank-848L Tthe progressive theory shares the assumption that schooling couild perform a productive fuLnction by providing skills that are valuable at work. 1/ School skills are defined to include both cognitive outcomes that are the major objective of the schooling process and noncognitive outcomes sometimes referred to as the results of the hidden curriculum. The progressives argue that not only do students not learn many of the skills they need for work, but that they also learn behavior that discourages individual growth and creativity. But the progressive theory does not acknowledge a relationship between the functions of the schools and the structure of the economy. Ac- cording to the progressive theory, the schools could at the same time both develop individuals to their fullest capacities and provide a labor force. When faced with difficulties in the educational system, the progressives seek to reform the schools by improving the teaching and curriculum. They feel that changes need to be made inside the system, not outside it. A major policy implication of this theory is that, if publicly financed schools provide equal services to all individuals., schooling would be a socially equalizing force in the society.

The structural theory holds that the primary role of education is to produce a work force, not to develop individual capacities to their fullest potential. 2/ The requirements of the work force tend to be defined as be- havioral skills needed to fit fvture work roles. The structure of the social relations of the schools mirror the social relations of work. Students learn to accept nonfamily authoritv, to develop disciplined work habits, to accept their position in the hierarchy through failure or success on school tests, and to seek rewards by meeting the school requirements.

In preindustrial society, a craftsman had control over both the product and process of his work. He produced and disposed of his own pro- duct. Apprentices did not expect to remain in inferior positions, but to become masters. In contrast to this control, modern production uses hier- archical modes of authority to organize firms. The personality traits re- quired for success in most jobs are similar to those traits required for success at most schools. These include subordinancy, discipline, cognitive over affective modes of response, and the acceptance of external rewards. The latter two traits need elaboration. Schools encourage cognitive over affective modes of behavior by penalizing creativity and emotional response.

1/ For the developing countries the literature is limited, e.g. Miller (1972) and Maccoby and Fromm (1970). Also see The School Boys of Barbiana (1971) as a proxy since it describes rural Italy. The literature is extensive for the United States. Examples would in- clude Holt (1970), Goodman (1965), Conant (1959), Friedenberg (1963), Kozol (1968) and Silberman (1970). Jencks et al (1972) make both progressive and structural arguments and reaches structuralist policy implications.

2/ For an exposition of the theory and evidence see Bowles (1970), Gintis (1971), Gignon (1971). - 1r4,

Ahceptance of extern.al reward is the substitution of external rewards - such as grades - for intrinsic rewards-like the personal satisfaction of acquiring and possessing knowledge - as the basic motivating force. If this theory is more correct than the others, then the liberating and equalizing functions of the schools as defined by the progressives are in conflict with the productive role of formal education. The policy implications of this theory suggest that basic changes have to be made in the structure of the firm and other economic mechanisms before the disfunctions of the school system will disappear.

Evidence is available to support all three theories. But in the past few years the evidence supporting the structural has significantly in- creased.

Data. The evidence which will be used to discuss the major issues is drawn from the research in both the rich and poor countries. This deci- sion needs justification. Some readers will argue that it makes little sense to draw upon research related to education systems and their effects in rich and poor countries because the systems and countries are so different. Other readers will argue that the behavior of the learner is the basic question, not per capita income; one must learn whether the education systems' and the learners' behavior vary only in degree, or vary in kind across countries. Stated more formally, are the educational production models used in North Atlantic countries inapplicable, or do variables only have different specifica- tions across countries. 1/

While the data could be more complete, they suggest that the educa- tional production models used in explaining why some students learn more than others, as measured by tests of cognitive achievement, in the North Atlantic countries are also applicable in the developing countries. 2/ A major reason is that learning behavior appears to share common mechanisms across cultures. Another reason for the comparability is that both groups of countries have students with a wide range of ability when they start school. Nigeria may have more studence with low IQs and impoverished family environments than Norway, but this is a difference of degree rather than of kind. The educa- tional objectives are similar in both countries. The educational research on the poor countries is fairly recent, and thus it could be argued that it has not stood the test of time. But it is important to note that the cross-cul- tural similarity in education models is supported by the psychiatric and psychological literature. See, for example, Field (1960), Inkeles (1969), Hunt (1967) and Murphy and Leighton ( ). The burden of proof now :--_s with those who wish to make the case that the factors which contribute to Nigerian students' cognitive and noncognitive abilities are different from those factors contributing to the same outcomes in Norwegian students' abilities.

1/ The educational production function explains the variance in cognitive and noncognitive behavior of students by measuring dimensions of factor inputs including schooling, parental background, and personality. See Jencks (1972), Husen (1967), Comber et al (1973) and Simmons (1974) for examples of research in both rich and poor countries. 2/ See Alexander and Simmons (1974) for review of this literature and Averch et al (1972) for a review of the methods of the literature. - 1b5 -

Some readers will argue that the educational production and behav- ioral models are too crude to give a sufficiently refined understanding to distinguish between learning processes in different societies. First, all researchers will agree that the models need refinement. But it remains to be seen whether these refinements will add new factors to the models or merely improve the measurement of the existing factors. It would still need to be determined whether or not either of these changes would show substantial cross-cultural differences. Second, the evidence suggests that the processes and structure of formal education vary more within a culture than they do across countries. The elite secondary schools of Rio, Paris and Nairobi, and their products, have more in common with one another than with schools in low income districts in their own countries. The Western models of re- source allocation in formal education are used in non-Western cultures with little change. The main variance within these models occurs according to the reaources made available to the localities; for example, rural primary schools with few textbooks and inexperienced teachers in Latin America com- pared to suburban schools in Europe with fine facilities and experienced teachers. Thus, we should not expect significant variations for the factors contributing to the variance in student behavior across countries.

This digression about evidence and methods is not intended to sug- gest that either are of sufficient rigor to yield absolute conclusions about what schooling does for individuals or societies in poor regions of the world. The next basic step in understanding the determinants of learning will come from the wider application of imaginative policies and experimental methods.

Education, Poverty and Development: An Overview

Developing countries have invested in education for a number of reasons, including meeting manpower demands, encouraging modern attitudes, acculturating diverse groups and providing economic opportunities for the poor.

The strategy for the poor has been to try and increase their access to education. If schools could equalize people's cognitive skills, this would equalize their economic opportunities as adults. The result of the strategy would be to reduce income inequality.

This strategy rests on several assumption: 1) Heredity is a major determinant of poverty: thus, reducing poverty in a society is a matter of helping poor children rise into the middle class. 2) A primary reason the poor do not escape from poverty is that they do not acquire basic cognitive skills. Lacking the ability to read, calculated and articulate, they cannot get or keep a well-paid job. 3) Since poor children do not learn the needed skills from their parents, the best mechanism for breaking this vicious circle is schooling. In the developed countries, the poor have even received programs to compensate for their educationally-unfavorable family background. - 156 -

The evidence collected in Europe andqhe United States over the last decade suggests that these assumptions are false. 1/ And the initial evidence from developing countries is similar. 2/ That some people become richer than others is not primarily because they have more adequate cognitive skills.

First, poverty is not primarily hereditary. While children born into poverty have a higher than average chance of remaining poor, there is still significant economic mobility from one generation to the next. 3/

Second, the equalization of reading scores would not appreciably reduce the number of the poor. While children who read well and articulate their thoughts clearly are more likely to have higher lifetime earnings of occupational status, there are other equally important factors involved. 3/

Third, there is no evidence that school reform can substantially reduce cognitive inequality as measured by reading or math tests. School resources do not have an appreciable effect on either test scores or educa- tional attainment.

Among the studies used to make these generalizations are data which support opposing views. But these data are considered exceptional because of the nature of the sample or the analysis. For example, a few schools do pro- duce higher levels of cognitive achievement among their students after con- trolling as many of the non-school factors as possible. 5/ In general, how- ever, in the national studies, differences between schools and school re- sources are not reflected in test scores.

Achieving high lifetime earnings and occupational status appears to be more a result of personality, occupational competance, and chance than

1/ See Averch (1972) and Jencks (1972) for review of the U.S. evidence. See Plowden (1966) for the U.K. See Thorndike (1973) for seventeen developed countries.

2/ See Thorndike (1973) for four developing countries and Alexander and Simmons (1974) for reviews of the evidence for seven other countries.

3/ In the United States, the only country with the best data, there is "nearly as much economic inequality among brothers raised in the same homes as in the general population. This means that inequality is re- created anew in each generation, even among people who start life in essentially the identical circumstances." (Jencks, pp. 7-8)

4/ In the U.S. there is almost as much economic inequality among those who score high on standardized tests as in the general population. (Jencks, p. 8)

5/ Isolating these classroom determinants of achievement is a major thrust of current educational research. They appear to be related to the teacher's personality and experiences other than teacher training. - 157 - the result of school-shaped cognitive abilities. In countries where employers hire only mechanics with primary school certificates, then the absence of the cc#-ificate is a barrier to higher status and earnings. But the evidence suggests chat if the certificate requirement were removed, the quality of the mechanics would not fall. In countries where school dropout rates are high and the percentage of the age cohort getting school certification is low, then the school system acts to limit economic opportunities for low-income children, not promote them. This is not an argument for eliminating formal education, only for recognizing its limitations for dealing with the issue of poverty.

What are the implications for a poverty-focused investment strategy? We should not expect that improving the quality or quantity of educational resources should significantly affect income inequality in most societies. This includes compensatory programs focused on improving the cognitive skills of the poor. Income inequality appears to be more a function of the distribu- tion of personality, luck, political power and physical assets than distribu- tion of the quality or quantity of schooling. Significant changes, however, in strategy could be made to affect the efficiency and effectiveness of educa- tional investment. We now turn to discussion of the economic features of educational systems.

II. Major Features of the Educational Systems

Objectives. Poor'countries have invested in education to achieve economic, political and cultural objectives. Literate farmers and mechanics are thought to have better production possibilities than illiterate farmers. Secondary school graduates were needed to perform technical and administrative functions in expanding economies and to replace expatriates. University gradu- ates were needed to supply professional and managerial skills needed in both the public and private sectors. Schooling contributed to political sociali- zation and cultural homogenization. Investment in formal education was consi- dered a major engine of economic growth and the more schooling per person the better; and for the poor, more years of schooling was perceived as the only hope for their children to join the urban middle class.

The transformation of systems of elite education which trained only a small proportion of the school age population to systems of mass education was a pre-independence promise. For adults universal literacy was sought. The supreme importance to political leaders of achieving enrollment targets can be estimated by the fact that targets were achieved and exceeded in many countries, the only sector with this consistent investment experience. The political pressures came from both low and high income groups, which realizec that the more schooling and certificates their children accumulated, the better their chance of getting both secure and well paving jobs. Cultural objectives like expanding the use of the national language and deepening the understanding of national history were also important. - 158 -

The above objectives were translated into a rapidly increasing denmand for school places. And, in most countries, the supply of school places has not yet satisfied social demand.

To what extent have the objectives been achieved? And to what extent were they realistic? Before attempting to answer these questions in section III, we first need to sketch some of the other major features of the education and development interrelationships.

Investment. To achieve expanded enrollments, most poor countries increased the proportion of both the national budget and the national income that was spent on education. 1/ For the period between 1960 and 1968, public expenditures almost tripled in one region and doubled in two others, as Table 1 shows. These are public expenditures and they seriously underestimate the total cost of formal education. Educational expenditures outside the Ministry of Education are usually not counted. Both the costs to parents of sending children to school, including income foregone, plus the expenditures on pri- vate education, particularly high in Latin America, are excluded. 2/

Table I

Public Expeoditure on Education

(Percentage of increase over 1960 base in current Trices)

1960- Per 1968 Annum

Asia 187 23 Africa 114 14 Latin America 136 17 Arab States 91 11 Mean 132 16

Source: Annex Table 5.

Public expenditure on education as a percentage of the GNP went from 2.7 percent to 3.9 percent from 1960 to 1968 for 54 developing coun- tries. This was an increase of 44 percent for the period. 3/ No other sector showed a higher rate of public expenditure. Reliable figures are not yet available on a global basis to indicate the proportion that were capital costs. Estimates range from 15 to 30 percent.

1/ See Annex Table _

2/ Some public schools also charge fees.

3/ See Annex Table 4. .- 19-

In the past investment in formal education was seen as an essential pre-condit.on to high and sustained rates of economic growth. The experience of the United States, Japan, and more recently Korea, is often cited to sup- port the education-growth causality. At the individual level in every country one observes that people with more schooling have higher incomes. Education investment was also considered essential for achieving political socialization, occupational status, modernization and other social objectives.

More recently, we are beginning to see that high rates of educational output followed rather than preceded initial spurts in economic growth in the above countries. Other factors appear to be more significant determinants of growth. And we find other countries, like India and Ceylon, with high levels of eeucational output and low economic growth. Beyond some minimum threshold, the rate of investment in formal education cannot be considered to have a linear and causal relationship to a high rate of growth.

Output. The expenditures produced rapid rates of increases in the numbers of students. To exemplify enrollment trends in the poor countries, four countries with different types of economies were selected - Afghanistan, Kenya, Colombia and Brazil. The rates of increase/annum are highest for higher education, ranging from 11 percent in Brazil to 28 percent in Kenya. Primary has the lowest in virtually every country, ranging from 7 percent in Brazil and Venezuela to 11 percent in Afghanistan. The rate of expansion of secondary is similar to higher. In the semilog graphs on the following page, the solid line shows the rate of increase/annum in enrollments by different levels of schooling. Even with massive investment efforts, countries which had espoused universal primary education more than twenty years earlier were, by the early 1970s, far from achieving it.

In the past it was thought that the higher rates of output, the better for both the society and the individual. Universal primary schooling was a common goal across countries. Shortages in middle level manpower were projected for decades. And the demand for university graduates would not be satisfied in the planners' lifetimes. Insatiable demand for the school out- put was the basic assumption.

More recently we have seen four reasons why these predictions of output needs were grossly naive. First, population growth was much higher than expected among the school age cohorts, thus forcing countries to delay or quietly abandon the universal primary target. Second, rates of economic growth were often not as high as predicted and jobs were not created as fast as needed to absorb the middle and higher level graduates. Third, planners assumed that new jobs could be filled by school leavers as apprentices or clerks, whereas most of the jobs required experienced workers. And fourth, political pressure from upper income groups forced more rapid expansion of secondary and higher education than originally planned, and primary invest- ment was reduced. Thus, the early manpower and other Justifications for high rates of output are now seen in a different perspective. DIAGUALI II - 1oO -

AVERAGE ANNUAL RATES OF GROWTH OF ENROLLMENT RATIOS PRIMARY, SECONDARY, AND HIGHER EDUCATION

(Initial and end point values on vertical axes)

KENYA AFGHANISTAN 7000 I I I I I I I I I I I I I I S . *In.tv... ISl. "'. 6000t .,. *--m-taoIRt.25%9 1.00 19t2 pOt.latsoru 1 1.n n6llo 0 1972 proptlation 17Z ')nioin 5000 GNP po. captial 1969 uiS 1:10 . -O GNP;oir calil lal wdi US$100

4000 _ 400 _ 350C - /15 -r 3000 - /100 _ 2500 / 2 50_ 2000 - Primary 8.28% 200 -

1bO0 150 Higher 27.55%

10C _ /00p*ma/ o 900 9 1' 900 80 700 70 600 60 5CtO ~ / 50 - 400 40 Higher 16.04% 360 3400 250

200

150

100 I I I I I I i I 90 1955 57 59 61 63 65 67 69 So 70 7 60 _ I I_ I I I I I I 1965 57 59 61 63 65 67 69 VENEZUELA I I I I I I I I

BRAZIL 300 1972 population 11.5 million Higher 18 11,.. 20-0 GNP pe, capiuai 1969 US$1000 89%, 400 - 200 - ~~~~~~~~~~~~~~~~~~~~econda,y14 1972 populalion 98.4 million H 0 300 - GNP Per capimal 1969 US$270 Hher 1102150 250 - / Pr,marg rf- 66% Secondary 11.88% 200 - l100 PrumarV 6.83 | 90 150 _0 _ 70 - 60 100 50 5 90 so04 70 -35 60 30

1955 57 59 61 63 65 67 69

1955 67 59 61 63 65 67 69 o Enrolimenis at each level.

World Bank- 8485 _ 161 -

Internal Efficiency. Turning to the efficiency of the educational system, we should ask, what are the relationships between the inputs of the formal educational investments and the outputs, measured in terms of the qua- lity and quantity of students.

Investment in some aspects in physical capital, like better light- ing and science laboratories, could also be expected to increase the quality of educational production. Have increases in real costs per student been translated into increased achievement scores and other measures of schoo'l output? Western data suggest that they have not. 1/ The few studies for developing countries are virtually consistent. 2/

There are several reasons for this apparently ostensible anomaly. The first is based on the production function analysis which suggests that the nonschool inputs are more influential than the school inputs. Thus, while replacing existing school buildings of local materials with others of rein- forced concrete may make a more pleasing structure and place to work, it has little effect on achievement. Second, as enrollments have expanded under pro- grams of mass education, a greater percentage of low income children are in school, particularly at the primary level. These students tend to have less encouragement at home, suffer brain damage as an effect of malnutrition, fall asleep in class as one result of low calorie intake, and get less attention from teachers than students in upper income groups. Teacher quality usually suffers in mass expansion, including disincentives for keeping the better teachers in rural and low income areas where they are needed most. Thus achievement scores for a district or a country may be stable or tend to fall as real unit costs rise. Questions related to the educational technology have been studied with sectoral and micro-educational production functions. These studies relate both school and nonschool inputs to the different types of schooling output that schooling is supposed to affect. While more of this type research is available for developed countries, some studies are also available for the developing countries. 3/

While earlier studies were consistent in demonstrating internal inefficiency, two national studies completed in 1965 and 1966 (the Plowden

1/ The data refer to large populations such as whole cities or regions rather than separAte schools. While data for individual schools are useful for experimental purposes, they are less so for policy purposes since the resources may not be duplicated quickly or the benefits ex- tended to a large population due to resource constraints. For examples of the western research, see Averch et al (1972), Comber et al (1973).

2/ For the poor countries, see Simmons (1974) Alexander and Simmons (1973) and Thorndike (1973). Schiefelbein and FerriT1 (Q72?) provile evidence thit some inputs may have an impact. Some-data suggest that increase in real cossts are associated with declines in achievement scores (VWYT, 1970).

3/ See Simmons and Alexander (1973) for a review. - 16.2 -

Report for the UK and Colemen et al for the USA) provided more conclusive evidence. Jencks et al summarized the efficiency and other literature in 1972. While the methods and findings have been criticized, little contradictory evidence has been pu-blished. 1/

The findings are quite specific. They show that the present tech- nologies of formal education are very inefficient in their promotion of learn- ing in both the poor and the rich countries. That additional marginal inputs of capital or labor with present technologies have little or no impact on the amount that students learn in school. What seems to be more important in learning subjects that are tested in school are the family environment, peer group interaction, personality, and nutrition. The findings do not study the minimum efforts to reach a learning threshold that could permit self-teaching to take place.

Students in classes of twenty-five learn no faster than those in classes with forty. In fact, some of the evidence suggest that the larger classes produce better learning results. Teacher training courses of four years produce results no better than courses of one year. There is some evidence to suggest that length of teaching experience affects students cognitive behavior, but the effect is weak. Students who have access to well-stocked libraries and well-equipped laboratories in school perform little better than students with poor facilities. While most of this research has been done on education systems in the rich countries, the research results for the poor are similar. One exception comes from Chilean research, where students who have textbooks do better compared to students who do not. 2/ The Chilean result raises an important question. Is there a critical minimum effort or package of inputs required to push cognitive achievement over a minimum threshold? Reaching this threshold would permit individuals to con- tinue learning on their own. For example, having one text book per student, compared to more makes a difference in reading comprehension scores, but 2-5 books per student do not. Similarly, we do not know if classes of ten students would perform better than classes of twenty-five to forty because schools in the surveys did not have less than 25. Private school often have class sizes that are 50 percent of the mean public size. It is unknown if this size is more effective. But halving public class sizes would mean also doubling school costs.in developing countries where teachers salaries are 90% of cur- rent expenditures. While it appears that increasing unit costs has no signi- ficant effect on improving cognitive achievement, we do not know what would happen to the rate of student learning if unit costs of the capital or labor inputs were substantially lowered.

1/ For a critique of Coleman et al. see Bowles and Levin (1968), Mosteller and Moynihan (1971) and on Jencks et. al. see the Special issue of the Harvard Education Review (1973).

2/ Schiefelbein and Ferrill (1973). _ 163 -

Most discouraging is the finding that the outputs like cognitive achievement which most school systems have been emphasizing, turn out to be of equal or less importance to other behavior skills in securing both employ- ment and job promotion. I/ The skills the schools have, wittingly or not, either encouraged like discipline or discouraged, and creativity. But we will have more on this in the section on employment.

Other measures of internal efficiency complement measures of the input/output functions. They range from how much children actually learn in terms of functional skills to the rate at which students are dropped or pushed out of school. (A dropout occurs at the student'a volition while a push-out is the result of school action.) 2/

Surprisingly little data is available on the functional nature of educational experiences. While studies exist which compare reading scores across countries, 3/ they do not indicate what the score is equivalent to terms of every day functions like reading and understanding a national news- paper. (UNESCO has maintained that four years of primary would be equivalent to adequate literacy.) Data for a North African country, however, suggest that six grades of primary education may not be enough to get a high percen- tage of students to newspaper-reading level. These data show that seventy- three percent could not read French adequately, sixty-two percent could not read Arabic adequately, and seventy-seven percent could not function adequately in arithmetic. 4/ Although the students surveyed were sixth graders, they had been at school an average of eight years. And the priw"'.y system in this North African country has high quality inputs compared to those of many other developing countries. Other reading test results, but not functional or criterion based, support this conclusion. 5/

Wastage rates, including dropouts and pushouts, are an important dimension of internal efficiency. Most developing countries do not have systems of automatic promotion from one grade level to another. Quotas and exams select the desired number of students to pass to the next grade. Some students may be promoted to the next grade or the next level (cycle), but decide for economic or other reasons that they will not continue. Both types of students are measured by wastage rates. Table 2 suggests the rates of primary school dropouts. The data from Latin America and Africa suggest that more than 50 percent of the students who start primary drop out before finishing. Several of the Asian countries in the sample have automatic pro- motion systems, thus raising the mean level. Secondary school drop out rates are only slightly better as shown in Table 3.

1/ Gintis (1971), Meyers (1972) and Edwards (1972). For research in progress for a poor country, see Simmons et al (1974). 2/ For review of the literature, see Beirn, Kinsey and McGinn (1973). 3/ iiusen (1967) anadomber (i973). 4/ Simmons (1973). 5/ Comber (1973), Thorndike (1973) and Simmons (1974). - 164 -

Table 2: Primary Wastage Rates

Cohorts entering primary school around 1960

(dropouts including pushouts, percentage of total in school)

Countries in Range of Median Major Regions Dropout Dropout

Africa 26.2 - 81.3 54.0 Latin America 33.1 - 74.7 61.6 Asia 0.7 - 64.0 20.2 Europe 0.7 - 48.3 18.3

Source: Goldstone (1972), p. 32.

Table 3: Secondary Wastage Rates

Cohorts entering general secondary school around 1960

(dropouts, including pushouts, percentage of total in school)

First Cycle Second Cycle Countries in Range of Median Range of Median Major Regions Dropout Dropout Dropout Dropout

Africa 11.8 - 47.7 30.8 7.5 - 61.4 41.9 Latin America 25.2 - 45.0 33.6 8.5 - 28.3 18.5 Asia 0.3 - 36.7 11.8 4.8 - 57.8 18.1 Europe 8.2 - 53.1 20.1 8.2 - 21.8 11.4

Source: Goldstone (1972), pp. 33-34.

If the dropouts occur toward the end of the cycle, do not the students get sufficient benefits? In a few countries dropouts may occur at the end of the cycle. But for most, the wastage proportion is constant at each grade or bunched near the beginning. The data in Table 4 are for an African country with a per capita income of $130 in the latter category. It shows that for the last year measured grade VI, only 15 percent of the entering class reached the sixth grade, and that 51 percent dropped out before reaching fourth grade. Still, these are improvements over the earlier years Table 4: Wastage Rates by Primary Grades

Enrollment in the first grade reduced to 1,000

Grade 1959/60 1961/62 1965/66

I 1,000 1,000 1,000 II 651 608 674 III 424 428 489 IV 292 304 345 V 96 127 170 VI 64 97 145

Source: Coombs and Hallack (1972), p. 75.

Why are the wastage rates-higher for developing countries compared to developed? We can only speculate because good data from developing coun- tries is virtually absent. 1/ First, the supply of school places as a percent of the school age cohort is higher in developed countries, this obviating the need to reduce the number seeking admission as in the developing countries. Finance is the main ccinstraint to expanding supply. Second, the countries' motivation for obtaining more years of schooling is, on the average, less in developing countries. While the poor of the Northeast of Brazil are aware that the Paulistas enjoy high standards of living, in part because of their length of schooling, the probability of the poor getting a university degree is about 0.02. This is rot encouraging to most. Furthermore, the children of the rural poor have more responsibilities than just doing well in school like most upper and middle income children. They have errands to run, animals to tend, siblings to look after, and by the time both boys and girls reach age 14 or so, the work of adults. Doing well in school has to compete with other demands among the children of the poor. Finally, the understand- ing and behavior of poor parents about doing homework and learning foreign languages is not usually as supportive as among upper income parents. In fact, behavior of poor parents, like severe punishment for school failure which en- courage children to quit school, is often dysfunctional if the objective is to maximize the child's years of schooling. Thus, the link between motivation and wastage rates across countries is closely related to the proportion of the poor in those countries.

If we combine the analyses of the functional reading data and the wastage data, we reach surprising economic hypotheses about efficiency at the primary level. First, a significant proportion of primary-school students quit school before completing the primary cycle, and thus yield insignificant private or social economic benefits. Second, even if they complete the pri- mary cycle, students may not have achieved even the minimum cognitive skills to have economic utility. And third, if the real economic benefits to primary

i/ See Beirn, Kinsey, McGinn (1973), for a full discussion of this data. - 166 -

education are minimal, the social rate of return to primary calculations may be TneanRring the effect of having a certificate in the employers selection process rather than of an increase in productivity caused by primary education.

The unit costs are another dimension of internal efficiencv, and are a, essential factor in the rate of return calculations in the next section. The data in Table 5 below suggest that (1) the average public expenditure of a year of schooling rises rapidly for the poor countries from primary co the university, and (2) students who stay in school longer get a significantly greater share of public resources.

Table 5: Public Expenditures per Student

(100 - current plus capital cost) Uganda Tunisia United States

Primary 100 100 100 Secondary 2,917 754 100 Technical (Indust.) 6,595 /a 867 - Technical (Agri.) - 1,733 _ University 12,234 4,108 199

Source: See Annex Table 8.

Note: (a) Industrial and Agricultural combined.

Because of the high wastage rates, the cost of producing a graduate, including the cost of those who do not graduate, can be 10 to 20 times higher than unit costs. The data in Table 6 use data from Tunisia which has wastage rates wlhich are about average for most poor countries.

Table 6: Tunisian Expenditure per Graduate

(Current and Capital Cost in Dinars, 1971) By Level Dinars/Student Dinars/Graduate Index

Primary 24 394 100 Secondary 181 4,398 1,116 Vocational (Indust.) 208 1,955 496 Vocational (Agri.) 416 6,656 1,689 University 986 14,790 3,754

Cumulative

Primary and Secondary - 4,792 1,216 Primary and Vocational (Agri.) 7,050 1,789 Primary, Secondary and Higher - 19,582 7,970

Source: See Annex Table 9, 1 Dinar $US2.08. - 167 -

In suni, educators and planners assumed in the past a direct, if not linear, relatlonship between school inputs and improvement in reading compre- hension and other cognitive skills. For example, the more years of teacher training the better the students' achievement scores. Or, higher unit costs meant better scores. Failing a quota of children from each year of the pri- mary school was seen as essential to the successful operation of the entire system and the society.

More recently, the data have suggested that the relationship between school inputs and outcomes may be positive, inverse or neutral. Student moti- vation, the result of many factors including personality, parent behavior and the probability access to higher education levels, is an important determinant of student achievement. The school can no longer be considered a lathe turn- ing out better student products in direct relation to the quality of the curri- culum and the intentions of the teacher. Furthermore, to extend the analogy, the lathe and craftsman can damage and misshape the student, particularly among low income groups, to an extent that was unexpected. Finally, the avail- able evidence on efficiency suggests that if major improvements in learning rates are to be achieved, much more effort is required in shaping and combining the non-school inputs.

Benefits and Return on Investment. While some economists feel that no reasonable measure of educational benefits is possible, such an attitude is not shared by most students of the problem. 1/ They sug'gest that such measures are useful for policy decisions when combined with vciv-economic information. These benefits include provision of manpower, cultivation and selection of potential talent, and reduced reliance on the market for services requir- ing basic cognitive skills. Education benefits can be classified as consump- tion only during the education process. After the period of formal education, the successive benefits are the results of investment because schooling is yielding benefits in future time periods. Important externalities, benefits of education that spill over onto ones' fanily, neighbors and community, may exist. This would include participation in community affairs, improved pro- ductivity from coworkers, lower law enforcement and insurance costs. 2/

Net benefits have been most widely measured by rate of return methods. Most of the rates of social return to investment in education data are based on the lifetime earnings of school-leavers discounted by a suitable interest rate and minus the individual and social costs of the school. 3/ Private rates of return include only the costs to the individual, including income foregone by not working, and thus exclude public expenditures. Both social and private rates tend to overestimate the economic rate of return because

1/ For an example of the minority view see John Vaizy, The Economics of Education (1962), and for an example of the majority view see Theodore W. ScaiuLLz, Tne Economic Value of Education ('ii63). 2/ See Weisbrod (1962) and (1964) for an extensive treatment of externalities. 3/ For a review of this method see Blaug (1967) and Bowles (1969). they do not correct either for the abilities and affective traits that students gain before entering school or for skills gained after school like work expe- rience. The rate of return data are usually aggregated by level of schooling, e.g., secondary, and thus combine variance across occupations. Some data which do makt_ some of these corrections, suggest that the rates need to be discounted up to 50 percent. 1/ Furthermore, the available estimates cover only one point in time and cannot give useful trend information. For these two considerations the rate of return data require careful interpretation.

Important characteristics of the rate of return studies are shown in Table 7. First, the private returns are consistently higher than the social returns. Second, the highest returns are to primary-level graduates; returns to secondary and higher education are usually quite close, but significantly lower than to primary. Third, the social rates of return for secondary and higher for most of the countries are surprisingly close to the social rates for investment in other sectors. 2/ But when these education rates are dis- counted as suggested above to correct for nonschool abilities, especially family background and work experience, they fall below the rates of return for the other sectors. Fourth, considering the fact that these rates are for one point in time several years ago, and that both unemployment rates among school-leavers and unit costs per student in real terms have been rising, there is strong support for a belief that the present rate of return to educa- tion is even lower. These four observations on the social and private profita- bility of investment in education raise serious questions about the policy rele- vance of past guidelines.

In sum, the issue is how strong is the evidence for selectively re- ducing investment in formal education, not eliminating it. Planners assumed in the past that the rate of return figures were useful approximations for justifying public investment in formal education. More recently it has become clear that these figures had less policy relevance due to the measurement difficulties comparing potential investment across sectors. Rate of return is better suited for intra-sectoral analysis.

Employment. A major reason for investing in schooling is that the increased value of human capital would then lead to increases in both the productivity of physical capital and in value added. But as we learn more about the relationships among the characteristics of human capital, and then their relationship to productivity, we are discovering that the cognitive

1/ For examples of two poor countries where an attempt has been made to correct some biases, see Selowsky (1968) and Blaug et al (1969). Jencks et al (1973, p. 222) corrected the U.S. earnings data for preschool ability and parental socioeconomic status and lowered the private rate of return by 40% and other biases were still uncorrected. 2/ The data in Table 7 use a social discount rate of 10 percent for data on 30 countries. - 169 -

Table 7

SOCI.,i. ANI) 110 VATh aKATVo'r ftVTURN VIY FDUCATIONAI. LV/rL

Social Pria te Country Year frimaty Secoidary Hligher Primary Secondary Higher (1) (2) (3) (4) (5) (6) (7) (8) United State 1959 17.8 14.0 9.7 155.1 19.5 13.6 Canada 1961 - 11.7 14.0 - 16.3 19.7 Puetto Rico 1960 20.9 23.8 16.0 a 24.4 23.0 Mexico 1963 25.0 17.0 23.0 32.0 23.0 29.0 Venezuela 1957 82.0 -17.0 23.0 - 29.0 27.0 Colombia 1966 40.0 24.0 8.0 b 32.0 15.5 Chile 1959 24.0 16.9 12.2 - - - Brazil 1962 10.7 17.2 14.5 11.3 21.4 38.1 Great Britan 1966 - 3.6 8.2 - 6.2 12.0 Norway 1966 - 7.2 5.4 - 7.1 4.5 1967 - 10.5 9.2 - - 10.3 Denmark 1964 - - 7.8 - - 10.0 Nctherlands 1965 - 6.8 6.0 - 8.4 10.4 Belgium 1967 - - 8.6 - - 25.0 Germany 1964 - - - - - 4.9 Greecc 1964 - 3.0 8.0 - 5.0 14.0 Iseat 1958 16.5 6.9 6.6 27.0 6.9 8.0 India 1960 20.2 16.7 12.7 24.7 19.2 14.3 Malaysia 1967 9.3 12.3 10.7 - - - PhDippines 1964 8.0 21.0 11.0 8.5 28.0 12.5 Japan 1961 - 5.0 6.0 - 6.0 9.0 S. Korea 1967 12.0 9.0 5.0 - - - Thailand 1970 18.5 11.0 11.0 26.5 13.0 14.0 Hawaii 1959 24.1 4.4 9.2 a 5.1 11.0 W. Nigeria 1966 23.0 12.8 17.0 30.0 14.0 34.0 Ghana 1967 18.0 13.0 16.5 24.5 17.0 37.0 Kenya 1968 21.7 22.9 8.8 32.7 35.2 27.4 Uganda 1966 66.0 28.6 12.0 - - - N. Rhodedsi 1960 12.4 - - - - - N. Zealnd 1966 - 19.4 13.2 - 20.0 14.7 Notes: aover 100.0 boner 50.0 -Not available

Source: Psacharopoulos (1972) - 170 -

benefits of ichooling naV rLot always have a significant impact on productivity. 1/ Thus, the essential assumption of human capital theory is in question. 2/ This needa some explanation because it appears to be inconsistent with the early empirical research.

The early studies showed a modest correlation between the per capita income level of a country and the average amount of schooling of the popula- tion. 3/ But correlation studies of this type are no indication of causality. The investment in schooling could have just as well followed rather than preceded the higher per capita income levels.

1/ The US evidence is derived from studies measuring the relationship between the level of cognitive achievement of students and their productivity measured by lifetime earnings of occupational status. Cognitive achieve- ment is measured in various ways including national examinations, rank in class, and grade point average. Controls are usually made for years of schooling and parental socioeconomic status. IQ is usually not con- trolled since it is a measure of cognitive ability and thus strongly correlated with other measures. The results tend to show that the rela- tionships between cognitive achievement and productivity are minimal, when they exist. See Collins (1971), and Bowles and Gintis (1973) for reviews of the literature.

IQ and income show a very modest relationship. The incomes of American men with IQ genotypes above the 80th percentile in the IQ genotype distribution were compared with men below the 20th percentile. The incomes of the top 1/5 IQ genotype were only 35-40 percent higher than the lowest 1/5. This is not a major difference when the men in the top 1/5 of the income distribution earn 600 percent more than the worst paid 1/5. Individuals with the same IQ genotype show at the most only 3 percent less income inequality than in the entire American population. Jencks et al (1972), p. 220 ff.,

2/ See Schultz (1961) and Becker (1961) for human capital theory and Bowles (1970), Edwards (1972), Gintis (1971) and Jencks et al (1977) for syntheses of the evidence which challenges the theory.

3/ For example, Svennilson, Edding and Elvin (1961). Other studies using macro production functions attributed the residual var'ance in output that was unexplained by the value of capital and the quantity of labor to the increase in quality of labor. 1/ In other words, whatever was unmeasured was due to the effect of schooling. The research was not de- signed to examine the effects of education, and the educational speculations trying to explain the results have not been supported. For example, from micro and sectoral research we would expect informal education outside of school, including oi.-the-job experience, to be more important than schooling in ex- plaining this residual. 2/

We lack sufficient evidence about cognitive and affective thresholds. At what point in the development of a certain cognitive trait does an individual have sufficient ability that he or she can then continue to develop itlwithout the assistance of formal education? For example, are there minimum levels of reading comprehension lessons or psychomotor skills? A threshold at which students can learn on their own? What other skills provide the necessary and sufficient conditions for attaining and then retaining this reading threshold? This question is basic for understanding the policy options for developing countries desiring to optimize the benefits from investment in schooling.

A major feature of the labor force in a growing number of poor countries is the educated unemployed. Because of the limitations of the data, all we can say is that the levels of educated unemployed are high compared to developed countries. 3/ Underemployment of the educated is also becoming se- rious when secondary school leavers take the jobs once effectively performed by primary graduates. And in these same countries expatriates often still hold jobs. For the last ten years in Tunisia, 50 percent of the secondary and university teaching positions have been filled by foreigners, while grad- uates financed by state scholarships become unemployed, underemployed, or emigrated. 4/

1/ Solow (1957), Denison (1962). 2/ When inputs were unchanged, output increased at one percent per annum at a firm in Horndal, Sweden, and is attributed to experience. See Lindhof ( ) for the Horndal effect. See also Arrow (1902), Mincer (1962), Zilstov (1969) and Simmons (1973) for studies on the effects of informal education. Other evidence suggests, for example, Berg (1970), that for each occupation there is an optinum amount of formal schooling. Thus, in some cases, labor productivity declines as schooling increases. 3/ Blaug (1973), p. 7-11. The employment data requ'red to understand the full dimensions of this probl%F need to be crosstabulated by age, schooling, length of unemploimwexi and hours worked/week and are virtually unavailable. 4/ Two reasons seem to explain cnis contradiction. First, incentives and streaming were insufficient to obtain enough secondary math, science and language teachers among the mix of university graduates. Second, teachcrs of French natiouality were offered to the government on concessionary terms. - 172 -

Even in countries that have high levels of educated unemployment in say engineeving, there often remains a high level of demand for places in engineering. 1/ This apparent contradiction can be explained. Although the chances of getting a job as a secondary school teacher may be better than get- ting a job as an engineer, the higher lifetime earnings of an engineer mean that it is worth taking a longer time as unemployed if there is a chance of getting an engineer's job. Because university leavers tend to come from upper income families, they can easily rely on the family for economic support while looking for a job. Thus the private incentive to get a job is much less for many of the educated unemployed.

Large wage differentials between occupations are major reasons for educated unemployment and increasing inequality in income distribution. This paper is not the place to review the inefficiencies of the labor market partic- ularly wage distortions. But it is important to point out that the classical rationale of the incentive of wage differentials no longer applies when a mechanic earns ten times as much as an agricultural laborer, or a doctor earns 100 times as much. An adequate supply-can be achieved at much lower wages. Table 8 indicates wage differentials by amount of schooling for Uganda, India and Brazil. The Uganda secondary school graduate's average salary is 20 times the per capita income, for India it is about 8 times. In Brazil, university graduates earn more than 16 times the average income of illiterates. While in the rich countries these differentials seem to be shrinking, in the poor there is some evidence to show that they are expanding. 2/ Thus, the lifetime incentive of getting a certificate may be increasing. And it may not be until wages are realigned that the uneconomic incentives for more schooling will be reduced.

In short, we observe the following seemingly contradictory, pheno- mena:

(i) relative wage differentials between graduates of different levels are either widening or relatively stable;

(ii) there is in general, an oversupply of higher level graduates, as indicated by unemployment data.

Why is the market mechanism not operating to reduce differentials, given this oversupply?

One interpretation goes as follows:

(i) More education does not by itself raise the productivity of labor. Job experience is required in addition to the education. This appears to be borne out by age-income profiles for education levels. Beginning

1/ Blaug, Layard and Woodhall (1969).

2/ See IBRD: Tunisia Report - Basic Economic Mission - Chapter 22 (1974). -173

Table 8

AVIRAGE YEARLY SALARIES BY lhXEL OF , INDIA AND BRAZIL

Educational Level Uganda Indi.-. Brazil (1965) (1960-.1j (1970

Illiterates - - 114 Primary - - 243 Junior secondary/middle 209 131 _ School certificate/secondary 550 185 189 Higher certificate/Indian graduate/Brazilian 852 311 o93 college Ugandan graduate/Brazilian higher 1,373 - 1,731 Income per head 28 25 175

Salaries as multiples of income per head

Junior secondary/middle 7.3 School certificate/secondary 20.0 7.7 2.8 Higher certificate/Indian graduate/Brazilian college 30.4 12.,4 3.9 Ugandan graduate/Brazilian higher 49.0 - 9.9

Notes:

(a) the data refer to average earnings over all age groups; (b) the data for Uganda refer to civil service earnings and those for India to average urban earnings; (c) Indian earnings are converted from Rs. to Is at the 1961 exchange rate; (d) under educational level, that for Uganda is shown first, followed by the rougiil comparable Indian, then Brazilian level; (e) Brazilian earnings are converted from NCr. to I and income per head from US$ toj at the 1970 exchange rate.

Sources:

(i) Uganda: J.B.Knight: "The determination of wages and salaries in Uganda", in Oxford University Institute of Economics and Statistics, Bulletin, Vol. 29, No.3, August 1967, pp. 233-264. (li) India: Mark Blaug, Richard Layard and Maureen Woodhall: The causes of graduate une!Mloyment in India (Allen Lane, Penguin Press, 1969) table 7.1. The table for Uganda and India was cited by Jolly and Colclough (1972), p.230. (iii) Brazil: Langoni (1972), Table 4.14, cited by I.M.Hume, "Notes on the Distribution of Income in Brazil", IBRD, 1972. Income per head is from 1973 World Population Data Sheet - Population Reference Bureau Inc., and is IBRD data. - 17 -

wa_es are, or course, higher for higher levels of education. More importantly, the rate of increase of wages over time is higher for higher levels of educa- tion. 1/ This effect is illustrated for India in Diagram 3; (ii) Consider, then, the time-path of a developing economy with a rapidly growing populaton, falling age structure and rising enrollment rates ac all levels. The growtth rate of graduates from higher levels of the educa- toron system will significantly exceed the growth rates of the economy and the 4xDdern sector. If the crucial modern sector inputs are capital and labor with schooling-cum-experience, then rising wage differentials are consistent with high levels of unemployed graduates in the early years after graduation and consequently high levels of unemployment for graduates (which category has a youlig age structure) in general. This phenomenon is illustrated for India in Table 9, where the average waiting period for employment of gra(luates has in- creased over time;

(ili) It is not surprising, therefore, that students continue to pursue higher levels of education despite the rising level of graduate unemployment. Given that costs are highly subsidized, and that the foregone earnings of education levels without experience on the job are small in comparison to wages with education and experience, the risk of unemployment in the early years is less significant than the possible maximum return; and

(iv) From a social standpoint, however, this demand for more education is not optimal. It is unlikely that the modern sector will grow rapidly enough, given capital shortages, to provide the necessary employment of this high-grade manpower. Already, increasing waiting periods push back the time when the high level graduates will have gained on-the-job experience and decreased the social return. In general, therefore, it would be advisable to suppress the demand based on low opportunity cost and high private returns, and to divert the capital so utilized into employment creation at the lower educational and skill levels. This not only would improve the income distribu- tion immediately, it would also, by increasing the base of the modern sector job pyramid, and thus improving the productivity of the supply of manpower for the top of the pyramid, increase growth prospects.

1/ Human capital theory would suggest that more education enables one to learn faster on the job. Progressive theory would suggest that the education system was selected the more able people, not added much that was useful, and thus we would expect the more able to learn more. - 1 75 -

DIACZAN! TII

AGE EARINGS PROFILES FOR INDIA

6.o00 20

4,000A_ arrngsterC oencfn lArps

3,000_/./

a o2,000a h 1, Middple

1,CO003 0~epetra

e _ _, Ili terate

tuto unduso f, astage.s _

_ 0D : 0 30 4 0 *0D0 AGES

1.4 Age esring profiles bv level of educa6tion. Urban India, 1960/1 Note: The diagronn shows earings before tax, and social costs of tuition unadjusted for wastage.

Soureco: Hlaug, L-ayard, Woodhall (1969i p21- WotidI Bank- 8487 - 176 -

Table 9

1954 Graduates: By Year in which First Employment was Obtained

Assumed Average Col (1) Year of First Percentage of Tnitial Waiting Period X EpMloyment Graduates (years _ Col 2 (1) (2) (3)

Already employed 25.0 0 0 1954 25.0 1/4 6.3 1955 18.2 1 18.2 1956 12.0 2 24.0 1957 6.9 3 20.7 1958 4.0 4 16.0 1959 1.7 5 8.5 1960 0.6. 6 3.6

93.4 97.3 Not available 6.6 100.0

Notes: (1) The table relates to those graduates employed in 1960 and excludes the 9.8 percent unemployed.

(2) In estimating column (2) it is assumed that students graduate at the end of June when exam results become available.

Source: Blaug, Layard, Woodhall (1969), p. 79.

In sum, some past observers have felt that there was some synergistic relationship between schooling and employment creation. More recently it has become clear that education cannot make a major contribution to reducing un- employment. There are exceptions only to the extent that: (i). nationals would be allowed to take the place of expatriates, and (ii) jobs were created in the education sector. Schools do shape the behavior of individuals in such a way that they are more attractive to employers, but so far, eliciting many of the desired behavioral traits has been an implicit, not explicit, part of the curriculum and educational system.

A basic issue in allocating education resources is the trade-off between investment in different levels of educatio given the probabilities of unemployment and the social rate of return. Given the available data on both these assumptions for countries that are pursuing a development strategy of growth with income redistribution, shifts in investment to lower educa- tional levels to achieve both quality and quantity objectives may be called for in many countries. And for some countries faced with a significant - 177 - proportion of the population living below subsistence levels, the shift of edutcation resources to agriculture can be justified on employmient, efficiary andl equity grounds in order to increase calorie intake/day and thus labor productivity, agricultural output and welfare. These trade-offs have not been seriously considered because of the unassailable benefits to education investment which have been assumed in the past. The new evidence on the contribution of education to productivity, plus the possible need to reallocate among the poorest countries by the rising energy and related costs, make this reexamination imperative.

Income Distribution. Schooling, the poor quickly learn in most countries, is an escape from poverty for only a few. The poor are the first to dropout because they need to work, the first to be pushed out beraurso they fall asleep in class as one result of malnourishment, and the first t(o fail their French or English tests because upper income children have had better opportunities at home. The hope brought to village parents by the construction of the primary school soon fades. Enough schooling to secure a steady, even menial, job for their son, let alone for their daughter, seems just beyond their grasp. They are never one of the lucky parents. Before they had a school, any schooling would have done to achieve their aspiration. Now a primary school certificate is needed, and some are saying that even students with some secondary schooling cannot get a steady job; and they could never afford to send their son away to town for secondary.

Does schooling widen the gap between rich and poor? Better data and models for examining this question are only now becoming available. 1/ The data are consistent in indicating that the children of upper income groups tend to get more years of schooling than low income children. 2/ In Tunisia, 8.8 times the number of students with high socioeconomic status fathers are getting some higher education than one would expect from the proportion of high SES students in the population (See Table 10). When this process is repeated in the next generation, schooling is thus a factor for widening the gap between rich and poor.

While schooling is not the only factor in increasing social in- equality, it appears to be an essential one because it legitimizes the achieve- ment of high-status occupations and increases the human capital of the rich. Students enter school with considerable differentials in their abilities. Some of these abilities are genetically determined and others are determined after birth by the environment. 3/ Children from upper income groups tend to begin school having been better nourished, better cared for, anci more exposed to situations conducive to developing cognitive and noncognitive skills useful in school and white-collar work than children from low income groups. For example, in many poor countries a second language is begun in primary school. Children coming from homes where this language is spoken have a con- siderable advantage over children who do not.

1/ For a review of the methods and data see Dasgupta (1974) and Jallade (1973). 2/ See Dasgupta (1973) and Bhagwati (1972) for India. 3/ For an excellent review of the evidence and controversy, see Jencks et al (1972)9 Appendix 1. See also Herrenstein (1971). - 178 -

Tihle 10 Socin-'conomir Statugs of Students' Fathers (l970) (percentage)

Socio-economic Primary Secondary Higher Ratio Status (1) (2) (3) (3)/(M)

High 1 1.2 5.9 10.5 8.8 2 26.5 40.0 26.2 1.0 3 12.7 20.8 17.6 1.4

Low 4 43.5 17.3 11.9 .27

Other 16.1 16.0 33.0

Total 100.0 100.0 100.0 n Students (000) 113.9 7.8 0.6

Status: High 1: Highest white collar, professions, heads of firms and employees Category A. 2: Employees Categories B and C, businessmen and skilled workers. 3: Foremen, semiskilled or unskilled industrial workers. Low 4: Agricultural laborer and non-industrial unskilled workers. Other : Retired, without occupation and father dead.

Source: Ministere de l'education Nationale, Bureau de Planification, Tunis.

Once the student gets to school, promotion is based on performance in cognitive achievement and other personality skills. In contrast to primary school systems of the rich countries, primary schools in many poor countries do not have a system of automatic promotion from one grade to the next. Rather, children who do not get a minimum composite score for their courses, or sometimes if they only fail one course, still have to repeat the grade. This often encourages the failure syndrome. Students who repeatedly find themselves scolded for failure and low marks learn to expect to fail. Their confidence is eroded. They lose their hope of succeeding. And this attitude of expecting failure in academic subjects is carried over into activities outside the school. Thus upper income children who enjoy the combination of more developed cognitive skills before entering primary school and a system of promotion that immediately bgins to reinforce their positive behavior and discourages the behavior of their low income peers have a much higher prob- ability of gaining more years of schooling. So much for the gross benefits of schooling. - 172 -

Othuer Features. Important subjects have not been discussed that require mention. They include the effect of education on modernization, political socialization, fertility, migration and acculturation. These effects are often used as additional justifications for investing in schooling. 'Atiie the data are more limited than for the features mentioned above, they tend to be consistent in showing that the effect of more years of schooling on behavior is much less than expected. Early studies on the subjects often over-emphiasized the strength of the relationship because of crude research methiods based on either simple correlation analysis which did not control for other factors, or absence of experimental methods.

Do more years of schooling lead to higher levels of political par- ticipation? Participation is defined by several variables including voting, attendance at political meetings, contributions to parties, interest in poli- tics, discussions of politics, and attempts to influence political decisions. Research in India shows that, while more educated people discuss politics more frequently, and are more likely to try to affect decisions, the educated individual shows reticence in voting or going to political meetings. 1/ A study in Japan concluded that voting participation is higher in rural than urban areas and that voting does not seem to increase significantly with the rise in level of education. 2/ Evidence from Tunisia indicates that the more years of secondary schooling an individual has the more likely they are to be alienated from the ruling party. 3/

Other Indian research suggests that educated individuals are more likely to support nondemocratic forms of government than uneducated. They are more likely to say that it would help the country if the army took over the government. 4/ Myron Weiner has concluded that "It is a popular though unfounded myth... that the collapse of party.government in such places as Pakistan, Burma and Sudan was a consequence of mass illiteracy and poverty." 5/

The modernization of attitudes and behavior has received considerable emphasis by both politicians and social scientists. There is general agree- ment among western trained social scientists to the characteristics of modern individuals. The modern individual shows a readiness for new experience and an openness to innovation, is disposed to form or hold opinions over issuus that arise both inside and outside his iumediate environment, is aware of the diversity of opinioni around him, is oriented to the present and the future rather than the past, believes in planning and organizing as a way of handling life, has a sense of efficacy, and believes that individual rewards should be according to the contribution and not according to hierarchial position. 6/ While these are thought to be held by important proportions of individual,- in industrialized societies, they also characterize ancient societies like tile

1/ Coel (1970). 2/ Richardson (1966). 3/ Taylor (1974). 4/ Goel (1970. Another Indian study found no relationship between education and political authoritarianism (attitudes that are proper or antidictator- ship). Elder (1966). 5/ Weiner (1965). 6/ Inkeles (1966). - 180 -

S~z~

D)o hchools raise the level of modernization of their students? Are .e hligher levels retained after leaving school? Are the individuals with aodern LrnLts rewarded wich hkigher earnings and satisfaction? While the state of the studies is in its infancy, the data from several countries suggest some tentative answers. Significant variance on each of the above characteristics exists with each of the more than seven countries studied. For example, urban groups have higher levels of modernity than rural. What causes these differ- ences is unclear. Briefly, schooling seems to have an impact, although there is considerable variance within countries and across different levels o' school- ing. Tunisian primary students do not seem to become more modern during primary, but students with some years of secondary do. 1/ But in one of the few studies on the economic relevance of modernity, the possession of modern traits did not have an impact on the earnings of Tunisian blue and white collar workers. 2/ Thus the available evidence suggests that, while schooling seems to enhance modern traits under some circumstances, its economic significance is less clear. This discussion of political socialization and modernization is not exhaustive, but it should raise doubts about the effectiveness of schooling.

We have not systematically reviewed the evidence in other areas that schooling is supposed to affect, like fertility, migration, delinquency, alienation and acculturation. Our initial impression, however, is that most the evidence is based on simple correlation studies which have virtually no policy relevance.

We now turn to a discussion of the implication of the educational features for understanding the major issues in formal education.

1/ Erkut (1972). See Inkeles (1974) for data on six other countries. 2/ Simmons (1972), Sack (1972). - 1 31 -

III. Major Issues in Formal Education

In the preceding discussion of the features of educational systems in poor countries a number of problems emerged. In this section the basic issues will be explored and priorities assigned. We therefore continue our search for the right questions. One pitfall should be emphasized. The research and experience of the past twenty years lhas emphasized the importance of Luderstanding investment in education from a general equilibrium rather than a partial analysis. The application of this approach in the next twenty years will probably show the inadequacies of our present understanding. 1/

The basic criterion for the selection of issues are their economic importance, including efficiency, growth and equity dimensions. While this will coincide with some countries' investment criterion in education, it miay not for others more concerned with political unity or acculturation. A second criterion of choice is the extent to which the issue is relevant to a sig- nificant number of countries. While the question of whether to extend the secondary cycle from six years to seven may be the major national controversy in some countries, it is a minor concern from a global view.

The final digression concerns what constitutes an issue. A policy issue is an important subject about which opinions of decision makers may differ. A policy issue is also timely, since decisions about it could affect future outcomes. Thus, this section will try to reveal different dimensions of a limited number of policy issues.

The resource constraint. Most developing countries face a basic dilemma. Future resources will not be sufficient to support present trends in the expansion of school places. An increasing number of countries are finding they can no longer afford an expansion of capital and current budgets for education at the expense of reduction in other sectors. Most of the ex- ceptions are the smaller ones with major oil revenues. The issue has three possible outcomes. Countries can:

(a) Continue to transfer resources from other sectors of the economy to augment those now available for formal education;

(b) Maintain present levels of resource use, but increase the intensity of use. e.g., use school buildings on double shift basis like Singapore or hire more teachers at lower wages; or

(c) Reduce the resources available to formal education.

1/ When we are confronted with a mess, we try to break it down into defina- ble problems. But, by definition, the residual of undefined problems may remain. And they may be the critical ones for understanding, if not solv- ing the mess. - 182 -

it is possible that resources witlh a near-zero opportunity cost coul ie created and used in eduicational production. For example, construcLiOII of sc.iools with voluntary labor and classroom Leaching by volunteers or low cost apprentices. 1/ But this is not sufficient given thie new resources re- quired at present trends.

Each alternative has advantages and disadvantages depending on a na,mber of factors ranging from the clamor of the other sectors which face potential reductions to the political pressures to expand the costliest levels of education. How each factor would be weighted will be country specific. But given the continued high rates of expansion of the social demand for school places, the sooner this issue is confronted the less costly the solutions will be.

ineffectiveness. IHow effective is an additional year of schooling in increasing an individual's life-time earnings, social mobility or level of sat- istaction? The input-output and rate of return analyses suggest that schooling is less effective than we had expected. An additional year of primary or sec- ondary schooling may have little effect on earnings or other outcomes. And this may be as much a result of the over supply of school leavers in the labor market a3 a result of the effect of schooling on human capital. But for what- ever reason, parents and planners in a small but growing number of countries are realizing that an additional year of schooling does not guarantee a higher social or private rate of return to their investment. 2/ For some types of schooling, marginal costs may be higher than marginal benefits.

Schooling develops both cognitive and non-cognitive traits, but the non-cognitive traits are not usually part of the curriculum. For example, failure in school can weaken self-confidence. School failure is effective in both conditioning them for low status jobs and then legitimizing their low place in the occupational hierarchy. 3/ The data increasingly suggest that em- ployers, when hiring new workers, emphasize the importance of the non-cognitive traits. Because the development of these traits are not an explicit objective of the schooling process, school resources are not effectively used to achieve the objectives. Schooling is a strong socializing influence. In many poor countries, school is so effective in socializing secondary students to white collar occupations that they prefer unemployment to manual jobs. From the view of the poor desiring to learn the traits needed for upward social mobility, it may be ineffective; from the view of the elite and threatened with downward mobility, it may be effective. 1/ The suggestion of volunteers and apprentices may appear heretical to some readers, but they have been used extensively in the developed countries at all levels. 2/ As we have stated in Section II (e), the rate of return results of the traditional estimations should be discounted by approximately 40% to give a more accurate estimate. Finally, no past studies have been able to separate accurately the certificate effect on earnings from the learning effect. See Carnoy, Thias, and Sack (1973) and Simmons (1973) for suggest- ive results. 3/ Kohn (1964), Gintis (1971). - 183 -

The issue is how to improve tihe effectiveness of the investment in human capital. The issue has two dimensions. First, how can the formal edu- cation system become more effective in achieving both individual and social objectives? Second, are there alternative or complementary investments which cound also achieve these objectives at less cost? Basic to the effectiveness issue is determining what tasks schools can best accomplish and which slhould be left to other institutions. Determining what these are, is the domaine of internal efficiency which we examine below.

To deal with the ineffectiveness issue, some countries might launch an educational reform commission to explore the strengths and weaknesses of the system. But when their report is submitted, only minor and piecemeal changes would be made. Other countries might seek the educational reform experience of other nations without considering the adaptations which would make them effective.

Improving effectiveness has two complementary dimensions. First, the decision-making framework should be broadened to include the producers and consumers of formal education. This would promote a national awareness about the ineffectiveness of education, and its relation to the labor market and social change. Second, based on an exploration of promising innovations, a modest but long-term program of research and development should be begun to define and answer the questions about ineffectiveness.

The myth of the immutable effectiveness of formal education is wither- ing rapidly especially among low- and even middle-income students and parents who find that more years of schooling do not increase the probability of getting a secure job - or even of getting any job at all - as much as they did in the past. Observers are becoming alarmed at the political and economic implications of the educated unemployed. The real, not the imagined, effectiveness of formal education is a central issue in educational planning and investment.

Inefficilency. Two major issues are basic to improving the internal efficiency of educational production. First, what factors contribute to pri- mary school graduates reaching an adequate level of reading comprehension? What is the optimum way to increase the percentage of the primary school grad- uates who master the basic cognitive skills? Dimensions of this issue include maternal and child care, nutrition, dropout rates, examination systems, learning methods, and the availability of primary school places. The emphasis is on the primary level because progress there will have significant import on both the internal efficience of the higher levels and the income distribution effects of educational investment.

Second, how can the rising trends in unit costs at all. levels of schooling be reversed? Dimensions of this issue include wastage rates, the wage levels of teachers and the wages of competitive occupations, the use of imported goods and services for both the construction of new schools and the development of course materials, and new ways of combining labor and capital (i.e., more efficient technologies) to maintain levels of cognitive achievement at less cost. For example, buildings could be used more intensively, or for noneduca- tional purposes. Lower cost paraprofessionals could assist both in the classroom and as tutors. - 184 -

The combined issues suggest several possible actions for a concerned country:

(a) Establish a commission of the producers and consumers of formal education to measure and review the inefficiencies at each level and propose a strategy for innovation;

(b) Establish cost accounting techniques, initiate educational production function studies, and organize human resource planning and management units in the Ministry of Education to provide the relevant information and analysis for invest- ment decisions;

(c) Based on learning research which indicates that the factors most important to cognitive and noncognitive achievement lie outside the formal education, decide to intervene in these traditionally nonschool areas with pilot projects as part of an integrated program for investment in human capital;

(d) Shift resources from vocational, secondary and higher education to assure that the best efforts of the education sector are made to improve the quality of primary education. While this would imply an increase in the unit costs of primary education, it would not mean an increase in total educational costs; and

(e) Combination and permutations of the above possibilities.

These five options are not meant to provide a comprehensive program for improving internal efficiency. Rather, they should suggest possible wages of beginning to explore two basis issues.

Inequality. For some decision-makers in countries like Tanzania, Cuba and China, the motivation for greater income equality has been translated into action in all the sectors of the society. The elite in-other countries are divided as to the best route to greater income equality, some suggesting that greater inequality now will mean higher standards of living and greater equality in the future. 1/ And in a few countries the debate on the causes and consequences of inequality is virtually unheard.

The evidence suggests that investment in formal education tends to increase rather than diminish income inequalities. Assuming that the national elite is interested, the issue, therefore, is to devise an investment strategy that uses the formal education mechanism to help narrow the incomes gap. The options depend as much on the motivation for equality, and the political se- curity of the elite, as they do on the sound design of the options. They are:

1/ For a review of the growth and equity issues, and policy suggestions, see Chenery and Associates (1974). _ 185 -

(a) 'If we assume that the educational structure 1/ and processes 2/ cannot be changed in the medium term, then we are left with reallocating the educational budget to reduce the education resources going to the children of high-income families and increase them going to low-income families. Without other changes within the sector and outside it, it is unlikely that this option has much potential;

(b) If we assume that the educational structure will not change but the processes can be modified with increasing equity as the main objective, then the system of selection, examination, promotion and financing could be modified to favor low-income children. 3/ This would have a significant impact on reducing inequality if it could be implemented;

(c) If we assume that both the structure and the processes can change, then private systems ,-ranging from tutoring to uni- versities, can be managed for social objectives. The government's monopoly of formal education could be ended, and thus increase the use of local resources, initiative, imagina- tion, and management; 4/ and

(d) If we assume that both the structure and processes can be changed and that, at the same time complementary efforts are made in macroeconomic policy like narrowing the trends in income differentials decertifying the hiring practices of employers, and taxing the benefits of education, then the possibility that educational investment could reduce inequality is sharply improved. Even the most drastic educational reforms, if isolated from the economic mechanisms, are not likely to achieve even modest equity objectives.

1/ e.g., Public/Private and Primary/Secondary?Higher.

2/ e.g., Curriculum, exams.

3/ Modifications would include semi-automatic promotion from grade to grade, examination of noncognitive aptitudes including motor skills keyed to employment needs, and a financial scheme that increases the financial burden on upper income students and reduces it for the lower income.

4/ Giving responsibilities and resources to local management could strengthen the local elite and only worsen welfare opportunities. If the local elite is responsive and responsible to mass interests, then welfare could be improved. - 186 -

That public education, complemented by private education under state supervision, has probably inicreased rathier tlhani decreasedl inicome Incquality Iii umost countries, is perhaps one of the major twentieth-century ironies of maLss education. Equal access to educational opportunities in the richl countries have not yielded equal outcomes. In fact in most poor countries, equal access to even primary schools does not exist.

Reform. Thie reform of social institutions has never been an easy task, The institutions of mass education are no exception. Two theories of educational reform define the set of options that countries face. The first is the theory that educational structures and processes reflect social and economic forces. If this structuralist theory is correct, then it follows that economic and social changes have to precede major educational reforms. Under this theory potential reformers can only wait for the preconditions to be met and in the interval study and experiment with what are the most prom- ising reforms.

The second theory, linked to the progressive theorists, does not make any assumptions about the interrelationship of the nature of formal education to other social forces. Rather it assumes that the education sector is capable of designing and implementing basic reforms without pressures from the society.

The history of educational reform, both in the rich and poor coun- tries, provides more evidence for the structuralist theory. 1/ The evidence indicates that innovations, but not reforms, are possible under the progres- sive theory. The industrial revolution, installation of democratic governments, or the imposition of colonial rule brought major reforms to existing educational systems. In the post World War II era in the developing countries, educational reforms have usually taken place with the rise of new regimes having a greater commitment to alleviating poverty than previous ones - such lhas been the case in, for example, Peru, Cuba, China, and Tanzania.

With this discussion of reform, we end the section on major issues and options. Some readers will be disappointed that we have not discussed or recommended specific educational innovations or reforms. There are two reasons. First, we know virtually nothing about the cost effectiveness of seemingly attractive ideas that are now being proposed, like nonformal education or functional literacy. 2/ Second, the process of learning about their potential utility is an essential dimension to whether or not a country should consider adapting them and is the major responsibility of the country. Learning sys- tems cannot be imported like bulldozers, and then be effectively used.

Because of the importance of educational reform for many countries, we devote the next section to exploring a strategy for approaching the issue.

1/ Katz (1968), Lawrence ( ).

2/ See Coombs (1974), Zymelman (1973), Simmons (1970/72). - 187 -

IV. Toward Options for a National Strategy

Countries are confronted with two alternatives: either to continue as in the past, including the institution of minor changes, or to design and Implement a package of reforms that reach well beyond the confines of the formal education sector to shape both the supply and demand for human re- sources. It should be clear from Section II that for most countries to follow the first alternative will mean even more serious misallocation than the present levels, and thus only postpones the day of reform. This section, therefore, concentrates on defining the strategy options within the second alternative.

A strategy outlines the crucial dimensions of a program to achieve a clear objective. Educational objectives in the past have tended to focus on increasing the quantity of school output, and to have assumed that the output would be efficiently used to achieve both growth and equity objectives. The educational strategies have been little more than programs for adding school places where the political pressures were the greatest.

But a strategy is not meant to be a comprehensive plan for actic-n Individuals in each country need to devise the comprehensive plans. Further- more, this attempt by an employee of the World Bank to suggest options for a national strategy should not be seen as one more example of neocolonialism, but rather as an attempt to focus the discussion on the central issues.

Some readers will question the utility of suggesting strategy options that have meaning for more than one country when the educational structures and processes of countries seem so different from one another and the percep- tions of the decision-makers so diverse. Does not each strategy need to be tailored to the situation? We have suggested in Section I that the differenct. may be more a question of degree rather than kind. The characteristics of t.- cia8 demand, educated unemployment, wage structures, examination systems and classroom organization are recognized as sharing common traits across countries.

Past educational strategies with objectives like increasing middle level manpower or universal primary schooling have been notable for their partial nature. While manpower analysis is an important dimension to edu- cational planning, it was often relied on as the only tool. Little effort was made to understand the supply or demand for educated manpower in a full equilibrium framework. Linkages within the sector, substitution efforts, complementarities, and trade offs with other sectors were given little attention under a policy that "more schooling was better."

A review of educational policy across the developing countries suggest: three broad categories: progressive, conservative, and transition. The two criteria for classification are: one, the extent to which is diminishing the socially-regressive effects of the formal education, and two, the extent to which the educational policies are improving the internal efficiency of learning process both in and out of school. Per capita incom. level is not a useful criterion. The number of progressive countries is small, - 188 - including Yugoslavia, Cuba, Peru, Tanzania and China. Several countries may be consi&ilred in a state of transition to progressive policies because either their policies are not sufficiently comprehensive, or insufficient time has passed to determine if the policies are having the desired effect. These include Algeria, Sri Lanka, Eucador and chile. Even though other countries may spouse progressive educational objectives, insufficient evidence exists to determine if they are progressing towards these objectives.

Change is not an easy process. For this reason we concentrate in this section on the preconditions for serious educational reforms. Furthermore, some countries have already begun to design and implement important reforms and thus need to determine how many preconditions they have fulfilled. Thus a two-phase approach to developing a national strategy is suggested. The first phase is a phase of awareness and a transition from the present system, the second is a reorganization of learning. Each phase has several reference points or criteria which enable planners to determine how far along they already are in either phase. Combinations of these reference points can be used to construct a national strategy. The phases appear below in outline form; a discussion follows.

Phase I: Awareness and Transition

(a) The nature of the demand for skilled manpower;

(b) Over/under supply of skilled manpower;

(c) Effect of past educational investment on social equity; and

(d) Resources required for transition.

Phase II: Reorganization of Learning

(a) Motivation for reform;

(b) Information for reform;

(c) Technological and legal changes; and

(d) Resources for reform.

Underlying the scheme for the design of a new investment strategy are several assumptions. First, as we have discussed in the previous sections, present education systems seem to have much less an impact on learning than we had previously imagined. Second, the kinds of cognitive skills that are learned in school are much less important for lifetime earning and satisfaction than we had thought. Third, given present trends in the use of resources for formal education, an increasing number of countries face the immediate deci- sion as to whether they should either regularly transfer resources from other sectors to meet the social demand for schooling, or strictly limit resources for schooling. The political pressures created by a decision to limit expan- sion, when combined with the inefficiencies and inequities of the present system, are encouraging some planners to seek alternatives to costly formal education. - 189 -

The scheme below suggests one way to find the right questions to ask. This is only thle first step in providing answers to the problems dsctrlied in Section II and III. Discussion of the answers to the questions should be part of detailed investment planning, and belong to the people who will have the responsibility for preparation and implementation. It is a major theme of this paper that the problems are so serious with our ways of thinking about investing in education that our immediate efforts should concentrate on asking the right questions. In sum, the necessary and sufficient conditions for com- pleting Plhase I are an analysis of: (a) demand for knowledgable manpower, (b) supply of manpower, (c) design for increased equity, and (d) resources for transition.

Phase I: Awareness and Transition

The road of educational reform is littered with rusting wrecks. The forces that can be allied against changes in the structure and processes of mass education are among the strongest in a society. It is for this reason that, as mentioned above, basic economic or political changes usually have to take place in society before fundamental educational reforms can occur. 1/ Hence, Phase I is the crucial first stage in determining whether or not a country is ready for the reforms implied in the options of Section III.

(a) Demand for knowledgeable mank?ower: The economic demand for manpower is generated by the creation of new jobs and replacement of workers leaving the work force. This is only one dimension of the social demand for school places which reflects both parental and employer requirements. Furthermore, the economic demand is for both experienced and inexperienced workers. Too often in the past it was assumed that new school leavers could satisfy the demand for experienced workers. The failure to specify job characteristics accurately is another reason for inaccurately specified manpower demands. What are these abilities? To what extent are they substitutable across occupations or within an industry? Is there a minimum threshold of competance that employ- ers are seeking? To what extent do employers use the amount of schooling or the number of certificates a candidate has simply to limit the number of job applicants, with virtually no reference to the skills that the years of school- ing may imply.

In most systems of technical education, there are no incentives for employers to participate in schooling decisions. 2/ An important first step in the transition to a system that is more effective would be to hold discussions about the characteristics/manpower demand among employers, students and teachers about these and other questions. Strange as it sounds, virtually no information flows between these three groups now, as they are not consulted by the educational planners about questions of the ability characteristics of Jobs.

I/ Lawrence ( ), Katz (1968). 2/ For examples of some exceptions, see the tax supported in-plant training schemes in Latin America. See Cespedes ( ).and Zymelman (1970). - 190o -

(b) Supply of skilled manpower: There are two basic supply side issues. The first is the extent to which worker characteristics required by occupations are enhanced by schooling. The second is the extent to which non-school ex- periences shape the desired traits more efficiently than schooling. For the first issue, are primary school graduates learning to read the national newspapers and then retaining this ability? Are they learning how to learn, and to enjoy it? Is rural education supplying useful abilities? Is the desired political socialization and modernization taking place, as it is assumed they are, or are the schools having a perverse effect? Is vocational education meeting the needs of workers, farmers, and managers?

For the second issue, the influence of non-school factors, there are several questions: (a) Can the desired skills be best learned through or on the job training? What abilities can be effectively developed in classroom situations?, and (b) Can skill training be more effective when it follows a period of work, rather than precedes work exper- ience, assuming students may be more motivated and'their objectives more clear? (c) Finally, to what extent is schooling important for promotion once in a job? How good an indicator of useful abilities are school exadina- tions? Is there an over-supply or an under-supply of knowledgeable manpower for different jobs? Answers to these and similar questions will begin to describe the characteristics of the supply side.

(c) Design for increased equity: The major equity issue in the transition phase is to determine whether or not investment in schooling is having a positive or negative effect on the distribution of income. For the countries where we do not have data, the hypothesis is that schooling is having a nega- tive effect on income distribution. A plan for at least neutralizing these effects should be designed during the transition phase.

(d) Resources for transition: To initiate and sustain discussion on the above three criteria requires two types of resources, leadership and expertise, for initiating, evaluating and managing change. Expertise without the leadership will not suffice. Leadership to provide the inspiration and management required both to raise the public's awareness of the issues and to use the expertise to propose solutions is required. Expertise means indi- vid'uals, with or without formal training as education experts, who are willing to explore the above questions with an open mind, and then design and implement experiments with attractive solutions. The existence of research institutes or substantial funding, while offering advantages, are not preconditions for reform.

When the questions raised by the above four criteria have been studied and the level of awareness of the need for reform is established, and when a feeling of the urgency for reform has been established among both pro- ducers and consumers of formal education, then it is possible to consider moving to Phase II. 1/

1/ The planning and management of change has been subject to extensive research. For an example of valuable guidelines - see Douglas McGregor (1960). - 191 -

Phase ll: The Return to Learning

If the evidence presented in Section II is a fair analysis of both the determinants of learning and the contribution that schooling makes to learning, satisfaction and growth, thieii planners, producers and consumers of formal education need to revise their expectations about the returns to in- vestment in schooling. More modest objectives need to be substituted for the old ones.

Two objectives may be reasonable replacements for the present objective of certification for its own sake. First, learning how to learn should be made much more explicit than it now is. For example, learning how to define and determine problems and establish optimal solutions should not be left for post-B.A. management training courses. 1/ Developing methods for the critical appraisal for other sources of information like radio, TV and word of mouth would be useful. Second, the process of learning should be more enjoyable than it often is if it is going to be actively and profitably used over a lifetime. The effect of schooling is often to damp the desire for learning in all but a few whose curiosities and motivation persists despite the effects of schooling. 2/

Successful achievement of these two objectives may in fact lead to more productive and less alienated individuals, but only a return to learning will provide the needed evidence.

(a) Motivation for reform: Individuals in almost every country are discussing innovations and reforms for their educational systems. Commissions are at work examining the strengths and weaknesses of the options. These discussions are important first steps in the transition phase to improved learning. But evidence of a deeper motivation for reform should come from the successful completion of Phase I. The supply and demand characteristics should have been carefully studied. Alternative designs to use investment in education either to neutralize or to enhance equity effects should have been prepared and debated. Progress on these dimensions would provide evi- dence for the existence of leadership and expertise. These achievements would indicate that sufficient motivation for reform existed to begin the planning and investment of Phase II.

1/ The importance of individual planning and problem definition has already been both demonstrated and replicated in subjects in the research of David McClelland (1969). 2/ "Thomas Edison Hated School" was the headline over the inventor's picture in a recent full page advertisement for correspondence courses in Time Magazine. Edison quit primary school after two years and spent a lifetime of self-taught learning. - 192 -

(b) Information for innovation: Whether it is in agriculture, educa- tion or another sector, most countries seem to have to reinvent the vheel when they tackle their similar problems. The relatively rapid spread of the new wheat and rice varieties is the exception that proves the rule. Usually Innovations diffuse slowly. Some potentially useful innovations have not been videly tried. They range from primary-level science curricula adopted for use by semiliterate teachers 1/ and farmer-oriented radio programs 2/ to short course paramedical training 3/ and ten-minute modules for tescher retraininR. 4/ These innovations have not spread, in part, because they did not have the massive comditment, experimentation and organization that the new seed varieties en- joyed. Unless countries have access to ideas and innovations that have been successfully used elsewhere, they risk repeating years of experience gained elsewhere. Thus the potential reformers have to have easy access to the avail- able information.

If we can aassue that we have a fair understanding about how innova- tions are successfully communicated, then poor countries can reduce their dependence on short-term consultants or resident experts. Common sense is supported by the findings of innovation research that hearing a new idea is only one element in deciding to adopt the innovation. 5/ It has to be seen in action, thoroughly discussed, and experimented with on a small scale where there is virtually no risk in failing. But the experience of innovation in other countries is not enough. It has to be synthesized according to local needs, and then eaperivents designed to test the efficiency and effectiveness of the proposed innovations. The processes of experimentation serve two pur- poses basic to reform. The first is the test of the innovation and resulting adaptations. The second is the learning experience and resulting confidence that the experimenters develop. The innovation becomes theirs not only because they thoroughly understand it after the experiment, but also they have probably adapted it to local needs, thus giving them increased pride of development. An essential link in the successful spread of the new wheat and rice varieties was the training of local experts at Chapingo and Los Banos in order to parti- cipate in the testing of the innovations in their own countries. Only rarely can outside experts achieve the required effectiveness in either experimentation or widening ripples of confidence in the pool of skeptical potential users because they are outsiders.

1/ Duckworth (1971).

2/ For an analysis of the India Radio Farm Forum, see Roy et al (1969).

3/ Chinese Barefoot doctors and US Army paramedics.

4/ Secondary Teacher Training Methods, State of California.

5/ Rogers and Shoemacher (1971). - 193 -

(c) Technological and legal change: Schools are a technology in the sense that they combined labor and capital to improve human capital. The evidence discussed in Sector II suggests that schools are not as efficient or effective a technology as we would like to believe. Thus, a major dimen- sion of the return to learning will be the exploration of other learning technologies like the apprentice system, the integration of learning and working, and parent-child interaction.

lu't an equally important dimension of technological change is the scale and complexity of machinery that individuals will have to operate and repair. Economically appropriate technologies are increasingly being designed and built for the developing countries. One criterion for this redesign has been both the durability and repairability of the equipment, not engineered obsolescence. 1/ Unnecessarily sophisticated and fragile equipment in developing countries is usually not economically profitable for the owner or nation even if it is financially,'profitable for the importer or manufacturer. The successful experiments range from printing presses to water pumps and tractors. The use of appropriate technologies will have the effect of depending less on imported spare parts when the similar ones can be machined locally, and im- ported repairmen when several assemblies and disassemblies will make the handler an expert repairman. Vocational skill can become available to vir- tually anyone vith curiosity, motivation and the basic psycho-motor skills, rather than to the domain of a few experts.

The law often supports mandatory formal education and gives the monopoly of formal education to the state. Private education is usually under state supervision, and exams for certificates are the same as in the state schools. When the effect of these laws is combined with the prevailing social sanctions to get a8 much formal schooling as possible, there are neither possibliltles nor incentives for alternatives to formal education to develop.

The evolution of the positiQn of education in Anglo-American law is enlightening. fi.ngkRah common law had given parents virtually complete control over the education of the child. But by the beginning of the 20th century in the United States, "the education of youth (was said to be) a matter of such vital importance to the democratic state... that the state mnay go very far indeed by way of limiting the control of the parent over the gjqcation of his,child." (Edwards, p. 24, 1955.) This statement should be contrasted with the United Nations Universal Declaration of Human Rights, adopted in 1948, that "parents have'a-prior right to choose the kind of edu- ,cation ttiat-ehould be given to theit children" (Article 26-3). 2/ With the degire ti-`improve learning, laws on 'mandastory schooling should be considered for revision.

t/ Until about 5 years ago, small boat fishermen in Central America had little trouble repairing their outboard motors. Then tolerances became finer, parts more fragile and the mechanisms more complex, thus making local repair impossible, lengthy..or expensive. ti/ See Bakan "(971) for further discussion of the implications. E -:'1oyerhir-Lrtg; practices which screen applicants on the basis of formal education have assumed the status of de facto law. These practices make some sense when the skills taught in school are a major requirement for the job, like vocational education for bricklaying. But when only primary school certificate holders will be considered for jobs as sweepers and apprentice mechanics, while students with the same years of schooling but without the certificate are refused, then the hiring practices are both unfair and uneconomic. Some firms in developed countries no longer request infor- mation about schooling when interviewing candidates for certain blue and white collar jobs and prefer simple tests of the skills the job requires. Or, if the job skills cannot be adequately pretested, they allow a trial period during which it is expected that the candidate either demonstrate or learn the essen- tials of the skills on the job. Later experience will perfect the skills. Other firms have been forced by the courts to eliminate years of schooling as a requirement for hiring. The U.S. Supreme Court found that the use of years of schooling as a criterion for employment discriminated against low-income groups in economic advancement. The poor had not had an equal opportunity to gain as much schooling as other candidates. The Court found that jobs did not require most of the knowledge for which schools test students. 1/ Thus legal means may be required to change employer hiring practices.

(d) Political economy of reform: In Phase I we suggested the importance of expertise and leadership to provide information on alternative ways of education and to raise the awareness of consumers and producers of schooling about both the deficiencies of the formal system and the alternatives. As we suggested above, this information process is broadened in Phase II to include the results of experimentation with the alternatives. But there are two additional dimensions to the resources needed for reform; they are pre- conditions for successful completion of Phase II. First, basic changes in the sectors outside of education have to precede and thus induce changes in the educational processes and structure. Virtually no historical evidence exists to show that educational innovations have forced major changes in the economy. As long as large of artificial wage differentials continue to exist that are highly correlated with years of schooling, then the social demand for schooling will not decline. Second, considerable political courage and power is required to implement reforms of formal education which will re- verse the unequal effect that schooling is now having on income distribution, and move toward more equal outcomes from the investment in schooling. Without this political precondition countries may decide that they do not wish to undertake either Phase I or II at this point in time. Even successful comple- tion of Phase I will create significant political pressure to move to Phase II.

1/ The United States Supreme Court made such a decision in Griggs vs. Duke Power in March 1971 and subsequent lower court decisions have had impor- tant implications for removing the schooling requirement for hundreds of skilled jobs both craft and professional. - 195 -

* * * * * *

Neither Phase I nor II ha9ve suggested that countries consider the immediate deschooling of their societies. Nor have they suggested that all poor countries should have similar learning objectives or mechanisms for improving the rate of learning. The purpose has been rather to suggest what are some crucial questions for exploring the basic issues.

The answers to these questions will yield the options for an educa- tional strategy. Thus each country, and groups within it, can choose a strategy that both confronts the essential issues, and recognizes the unique conditions of the country.

A Best Guess. Ihe preceding discussion was intended to explore issues. We cannot suggest a blueprint for educational reform because each country and groups within the country have to develop the education program which they want. While many are aware of the inadequacies of the present systems, little hard evidence exists about possible options. This is the major dilemma of parents and planners. Little was known about the effective- ness or cost benefit nature of most social investments before they were launched nationally, ranging from health insurance to teacher training and family allow- ances for children in both developed and developing countries. It is not sur- prising that in retrospect they may appear ridiculous. We know more about the cost effectiveness of alternative production techniques of motor boats than we do of teaching reading or delivering prenatal care. Now is the time to begin to design and test educational options for achieving our objectives of improving economic growth, educational efficiency and social equity. While some countries may be able to design and implement options without basic changes in their structure of'production and consumption of their economies, others will not.

The economic guidelines for improving educational investments can be considered as an an`roach -tothreA nroblems discussed in section III. They ire as follows:

A. To damp the social demand:

(1) Ensure that artificial wage differentials for different occupations be rapidly narrowed. International trade in human capital also requires better controls to limit the export of highly-skilled manpower -from poor countries. Artifical distortion8 in-factor and product prices should be reduced to encourage use of labor intensive technologies; - 196 -

(2) Ensure that certificates of schooling are no longer re- quired for most occupations.. Wlen employers become more skill specific in their needs, a flexible education structure will emerge to meet the better specified demand;

(3) Require that middle- and upper-income students share a greater burden of the costs of their secondary and higher education. Explore the advantages of establishing an educational bank to transfer to the consumer the responsi- bility for both repayment and 'purchase of educational services. Time spent in public service would count as a form repayment, and should be-encouraged. Localize school taxation and expenditure so that the costs and benefits are better understood locally. Low-income groups should have sufficient subsidies to permit them to overcome the private costs of schooling; and

(4) In countries with an over supply of school leavers, intro- duce a system of quotas whereby the absolute number of students in the formal system at the secondary and higher levels is restricted to the rate of population increase or even less. It can be combined with existing exam systems. In some countries, rationing is already taking place on a basis of geographic location, which serves as a proxy for parental social status. It should be made explicit and fair. Finally, this should encourage the share of the national budgets and GNP going for schooling to fall for many countries and level off for others. Misallocation will be reduced.

B. Increasing the economic relevance of learning alternatives is more difficult than it may seem. Some countries like Cuba and China have made more sustained and comprehensive efforts than others. 1/ Rich countries have also made considerable efforts to improve learning among low-income groups. 2/ Some countries are considering nonformal education as a panacea for the illnesses supposedly caused by formal education, but we know virtually nothing about either how effective or how costly this is. 3/ To improve the opportunity for the development of alternative learning systems:

1/ For Cuba, see Hahlman (1973), Bowles (1971). 2/ For the United States, see Beller (1968(, Deveriberg (1970), Gordon (1957). 3/ Coombs (1973). - 197 -

(1) Eliminate the monopoly power of governments in the field of organized learning. If creative and economic alternatives to formal schooling are to develop, then incentives should be established to encourage more productive learning tech- nologies. Experience is increasing with voucher systems where the parents pay the teachers. '/ Apprentice systems may be the most efficient for other skills;

(2) Increase the effectiveness with which the basic cognitive skills are learned, and thus reduce the phenomenon of primary schools producing semiliterates; and

(3) Explore the opportunities of informal education, using adults and more advanced students to teach.

C. Compensate for the inequality effects of most of the existing formal school systems:

(1) Establish quotas on the basis of social class, geographic location or school, to assure that the proportion of the iow income students at secondary and higher levels is equal to or higher than their representation in the population;

(2)- ConBiider the use of automatic promotion from one grade to'the ne,xt;

(3) Do-emphasize the role of examinations for promotion. Eliminate the social class bias to present examinations. 2/ Ad4 the testing for wider.range of behavioral skills; and

(4) Develop mechanisms to encourage students who dropped out to re-enter the -formal system at an older age.

'These suggesttions are a best guess as to possible guidelines. They re :nothWBg ,more th-an a starting po±int for'discussion, among the- producers and conaumers of formal education to improve,efficiency and equity.

Concius ion

We have not suggested what proportior. of the GNP to invest in education because the anaiytic techniques are not 'sfficiently developed. We have examined the nature of the educational production process and found that a range of nonschool inputs are usually stronger determinants of learning and beha8vior thi8n the sichool 'inputs. School inputs are often insignificant beyund undefined threshol-d levels. Economic efficiency seems low, particularly at the secondary aid higher level. We have also examined the effect of education

1/ Freeman (1973),.Jencks (1971). j/ See for example, ILO Kenya (1973), p. 523. - 198 -

Table 1s INDEX OF VItO1.L ENTS (1960 - 100)

Priary, Secondary, and 1ltter Education

__- ~~~~~~AF R I C k

- P S HKENYA FA ASCAR NvI(iFR STrNFrALAHL ',A N -IA ______II___ _ .P S i P 5 ~ H 41 7

1955 55 L9 62 6h 60 57 38 28c - 48 56 36 5h 70 85 87 60 62 1%60 1o0 100 100 100 100 10) 100 1000 - 100 100 100 100 100 100 i00 100 100

1965 133 217 877 1119 208 278 233 252 - 170 278 198 i63 16e' .i F', 35) 13)

1966 - L? (L 1 U 6L.'

1967 1h5 399 1,295 165 233 3h4O 290 321 - 9L) 39i iOL 22L, '6e .20 109 20L

1968 155 454 1,61 181 319 321 308 366 - 199 191 2h9 301 1l9 239

1969 164 538 196 316 461 - 200 133 lIl

1970 183 603 - 206 (d)

A 9 I A

Ar?ANISTAN INDiA rlA RT_1 A1'A

P S H P S r s H P

1955 6L h6 t hS 68 63 68 81 lOh 80 75 109 69 1960 100 100 l00 100 100 100 100 100 100 100 100 100 1965 20h 239 203 153 169 163 137 lh7 1143 117 122 86

1906 13 15Sh 121 127 1967 255 149 168 173 125 140 84

1968 269 418 309 153 186 175 130 15S 86

1969 285 1493 155 20B

1970 308 605 159

LATIW AJSRICA

BRAZIL U r)fOTOTA PERU vEXEZUE[A

L _ S R P S_ H P S H P S H P S H 1955 65 56 76 n 75 62 3 56 59 75 57 5h 53 36 29

1960 10i 100 100 100 100 lo 100 100 100 100 100 100 100 100 100

1965 133 19 163 136 ieo 1147 135 169 192 139 195 208 119 16). 175 1966 1h3 202 220 239

1967 150 206 225 151 201 180 153 233 258 155 258 297 127 198 222 1968 160 236 295 166 211 228 162 244 162 28h 131 21L. 52 1569 165 267 165 222 138 248 1970 (d)

Wotaeu ba including Junior secnhdAry classes. cl not Including vocalJorsal education di not inclu4inc teacher trnininc.

Sourc" UlZSCO StAtiattcaj Yearbook 1970 TatbLem 2.7, 2.9. 2.12 1971& Tables 2.11, 2.12, 2.15. - 199 -

Table 2# ENROLLHLENT RATIOS

Pureentage rroiled or Corresponding Population of School AgV Primary, Secondary and Higher 8ducation

A F R T C A

Tear KENYA HAI'AGASCAR NIGER SENEGAL tUNISIA UGACNA

P S H P S I P S H P S H P S H P S H 1955 32 1 37 3 2 O.lc - 14 2 L7 9 36 4 1960 49 2 0.04 52 4 0.10 6 0.3c - 273 0.50 74 U 0.88 51 5 0.15

1965 55 4 0.36 70 7 0.28 12 0.6 - 40 7 0.90 102 18 1.78 U5 9 o.18

1966 55 5 13 0.8 - 42 8 106 18 52b 3c

1967 60 7 1 8 b14 0.8 - 106 19 2.09 jlb 5c

1968 60 8 0.67 77 10 0.43 14 0.9 - 4I 0.90 107 20

1969 5s I

Tor ATgRABSTAN INDIA KOIEA lIAIIAHD

P S H P S R P 8 H P S H

1955 6 1 34 7 89 29 79

1960 10 1 0.13 L2 10 1.69 96 27 4.70 12 1.92

1965 16 2 0.25 S6 15 2.65 100 36 6.18 80 12 1.64

1V66 ir 3 102 34 80 12

1967 19 3 1b 34. 80 13

1968 20 h 105 36 81 13 1.55

1969 20 5 0.38 104 38 7.19

LIATN AHERICA Tear HMZL UTDPALA COLOMBIA PERU VENZUEIA

P 9 P _ R P 5 H P H P S H

1955 76 8 43 5 69 7 77 U 67 10

1960 lo U0 1.U5a 49 6 1.68 77 10 1.76 88 18 3.62 100 23 4.o0

1965 15 18 2.20 55 9 2.16 88 17 2.94 102 29 8.0l 95 30 6.33 1966 120 19 S7 9 90 20 106 32 96 31

1967 123 20 se 10 93 22 109 36 95 33

1968 128 23 61 9 95 21 4.98 li 38 10.60 96 34

1969 128- 252 4.36 5 9 3.40 98 38 8.82

8at0st a* Uter Education School AgV Taken to be 20- 24 years.

Sources U8ESCO Sttistical. Yearbook 1970 Table 2.5, 1971 table 2.7. Annex Table 3

AVERAGE ANNUAL RATES OF GROWdT OF ENROLLMENTS( ) AND EVRNOLLMENT RATIOS

(1955 to end of data series in Tables 1 and 2 - percent) Primary, Secondary and Higher Education

0 AFRICA 0

Education KENYA MADAGASCAR NIGER SENEGAL TUNISIA UGANDA Level (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)

P 8.28 4.95 8.31 5.79 16.33 16.14 11.Lg 9.21 9.35 6.53 5.07 2.9IL s 18.25 17.3h 19.98 9.70 22.33 18.hl 17.69 13.h3 10.23 6.33 4.71 O.: H 27.55 42.23 1h.25 20.00 - - 18.90 7.62 10.18 ll.L2 10.99 3.:'I

ASIA Education AFGHANISTAN ITDIA KOREA r.AILAND Leve' (1) (2) (1) (2) (1) (2) (1) (2)

P 11.09 8.98 8.61 5.12 h.55 1.12 L.28 0.19 s 18.70 12.18 10.28 7.92 5.06 1.95 2.69 1.00 16.oL 12.66 9.17 9.l1 6.22 h.84 1.65 -2.6-

LATIN AXERICA

Education BfAZIL GUATEMALA COLOMBIA PERU VENEZUELA Level

6.13 z 9 6.09 2.29 6.29 2.L9 6.15 2.11 6.66 2.75 ^8.78 r e L.2? 13.09 8.82 13.32 10.01 1L.85 10.01 11.02 1.9> 10.51L 8.15 13 .1 13.82 ]J.±.30 li.37 18.11 9.18

Xote: Yig.e-r edtcaticn begE-im w 1960. .->urces: Tatles I and 2. - 201 -

Annex Table h

Public expenditure on education as % of GNP 1960 and 1965-1968 (unweighted averages)

'No. of countries 1960 1965 1966 1967 1968 covered

World (85) 3.02 3.75 3.83 4.08 4.24

Developed countries (31) 3.52 4.45 4.55 4.73 4.80 Developing countries (54) 2.73 3.35 3.42 3.72 3.91

Sourcoe Goldstone, p23 - 202 -

Annex Table 5

- PUblicUxc ±t-xC-A nn education, 1960 and 1965-1968 (millions US dollars - in current prices) (revised)

Majoi regions 1960 1965 1966 1967 1068

VIOiLD TOTAL 1) 54 350 96 360 106 980 119 090 131 640

AFRICA 1 110 1 660 1 920 2 170 2 370 NORTHEIRN AMFERICA 22 670 39 740 44 050 49 940 56 510 LATIIN AMERICA 1 880 3 230 3 670 4 000 4 430 ASIA 1) 3 710 7 380 8 370 9 470 10 660 EUROPE AND USSR 24 380 43 280 47 660 52 110 56 220 OCEANIA 600 1 070 1 310 1 400 1 450 (ARAB STATES) (700) (1 020) (1 100) (1 210) (1 310)

DEVELOPED COUNTRIES 49 450 88 190 97 820 108 670 120 290 DEVELOPING COUNTRIES 4 900 8 170 9 160 10 420 11 350

1) Not including China (mainland), Democratic People's Republic of Korea, and Democratic Republic of Viet-Nam.

2) When national currbncies are converted Ii to the US dollar the inflation effects in the other ourrercies are minimized.

Source; Goldstone, p25 Annex TRble 6

AVERAGE WAGES BY SECTOR FOR SELECTED COUNTF.IES MlDEXED TO LOWEST SECTOR WAGE IN COUNTRY (-100)

SECTORS AGRI- MAWJ- FOOP, T?ANSPOJ r IST- '7. BRANC1ES IN YANUFACTURE CULTURE FACT-iE PRO. TOBACCC CHENIICALS FU?I.'TURc EQUIPMENT M1,iI'.Iz R'JCTI1' ?ORTAr:TA A,. Africa

Ghana 100 231 127 455 257 131 25 225 1IL 261 226 Kenya 100 244 216 542 237 100 220 279 285 661 - Tanzania 100 208 - - - - - 21.9 171 262 223 Latin America

Colombia -100* 155 132 126 137 121 150 253 - - Guatemala - 138 113 234 116 100 16L - - - - Peru - 132 202 113 100 150 - 261 252 238 Venezuela 1-0 115 10 160 100 225 26- - - Asia

Indj4 100* )02 - 4 25 316 460 100 - Korea (ROK) 100* 137 11.2 - 159 126 1Ll - - 150 Philippines - 173 132 10L 167 100 119 173 - 162 191 Europe

Austria 100 2OE 164 164 ------157

* Estimated by multiplying daily rate by 200 working days.. Axnex Table 7: FRENCH ACHIEVEIENT: PERCENTAGE CORRECT --4SPOi4SES BYI GRkDE

Stanidard Total Correct Responses Mear, Deviation ___1) _ 1 __ 2 _ __s_ .' _ _Correct Crrect

18 1I U 0 0 .5. ;;fiU.r, j R.'ry 14 38 2' 23 4, 1 1.(Y) 1.3,' CVi'lP'! i~iwl;.l' 4' ]2 26 3t. 22 5 2.70 31'J <1:iCl '2t'((J-lca:u1'ry 0 2 6 31 /t0 21 3.71 0.') i

ARABIC ACUIlEV.'H;.NTI': PERCEN1iGE CORREI\lJCl REs'2SM:iS BY'iGRAD)E

Tot-i. CoeS .Standard (,radc: Tot.l]. Co-r'ct: fAcs poezfi. Niean Deviation 0 ] 2 3 4 5 Corl I- ct wect

4t1 }'rimary 42 30 15 12 0 0 .97 1.01 5tll )bllrivlar7y 7 20 21 42 10 0 2.28 1.IL) 6th ]PriiinrYy 4 8 15 36 27 11 3.08 1.22 2n(1 Seco.(i.n)y 0 0 5 19 35 41 14.12 0. ',9

ARII3iMll.'T'1C AaIULVLM1ONT: PElRCElNTAGE CORl(.\T P ONSEO,S I1Y GRA\DE

Standaxrd Gradc yTotal Corrclt Responscs Meall Deviation 0 1 2 3 Correct Correct

4th Pi-inary 48 45 6 0 .57 .60 5tl P'rilnary 10 32 56 1 1.49 .69 6th Plrimary 3 14 60 23 2.02 .70 2nd Secon(dary 1 5 42 51 2.44 .65

N.B.: UhLcorrected for guessing.

Source: Sinumons, 1973. - 205 - Arnnex Table 8

P111131' APEFI;ND1PEH STUD1INT

1. Ugan( hillings 16) Curre:it Capital Totztl index

E-rirnsrv 170 300 410 100

Secondary 2,710 11,000 13,710 2,917

Technical 20,000 11,000 31,600 6,595

University 22,500 35,000 57,560 12,234

Source: CooTnbs and Hallack, p.21 (lsh $ )

2. Tllnisia (Dinars,1971) Current Capital Total Indea

Primary 23 1 24 100

Secondary 156 25 1 o 754

Technical (Indust.) 202 6 208 867

Technical(Agri.) 416 - 416 1,733

University 762 224 986 4,108

Source: IBRD Thnisia, 1973 I dinar = $1.20

3. United States (Dollars, 1969) Current Capital Total Index

Primary 747 100

Secondary 747 100

University 1,490 i99

Source: US Office of Education, Digest of Educational Statistics, (Washington, D.C., US Govendment Printing Office, 1969). Annex Table 9

Expenditures PER GRADUA.:E IN 1971 (current prices in dinars)

Mean years Number of Mean years Total Cost of D/ required D / non-certificate schooling non-certificate D / Student to obtain Graduate students per non-certificate. Students Graduate certificate certificate holder students (1)z(4)x(5) (3)+(6) (1) (2) (3) (4) (5) ( (6)D

1. EAQa LEVEL

Prilary 24 8 192 2.1 4 202 394 Secondary 181 9 1,629 5.2 3 2,769 4,398 Vocational (Indus.) 208 4 832 2.7 2 1,123 1,955 Vocational (Agric.) 416 7 2,912 3.0 3 3,744 6,656 Hig.her 986 6 5,916 3.0 3 8,874 14,790

2. CUMULATIVE

Priiaary + Secor.dary 1,829 4,792 Primary + Voc. (Ag.) 3,104 7,05)0 C Primary + Sec. + 19,582 Higher 7,745

Source: IBRD, Tmnisia, 1973 Annex Table 10 - 204 - 0OOTDPARISOI OF IisCOIIE DISTR'3BUTIOJ IN BRAZIL IiN 1960 AND 1970 SHOWLIJG AG2, SEX A±{ED EWUCATIOIJ

AVERAGE II;COME SHARE OF LABOR FORCE % OF INCO1E (NCr/^lth 1970) GINI 1960 % Change 1960 11971970 % Change 19 1a 1960 197 C Canag

Sex ii 63.22 79.52 - 4.45 89.12 86.51 - 2.93 221 306 +38.46 .4902 .5672 +15-71

F 16.78 20.48 +22.05 10.94 13.49 +23.31 130 186 +38,81 .5269 .5441 + 3.26

Elucation A 39.05 29.75 -23.81 21.12 11.79 -44.18 111 112 - .4162 .3886 - 6.63

P 51.71 54.47 + 5.34 53.17 46.46 -12.62 211 240 +13.74 .4183 .4614 +10.30

G 5.16 8.03 +55.62 11.06 13.74 +24.23 440 482 + 9.54 .4307 .5134 +17.03

C 2.67 5.24 +96.25 6.97 12.79 +83.50 536 688 +28.36 .4247 .5007 +17.89

s 1.40 2.51 +79.28 7.66 15.21 +98.56 1.123 1.706 +51.91 .4590 .4596 + 1.31

r:

Age 10/14 1.98 2.37 +19.70 0.50 0.49 - 2.00 52 58 +11.53 - - -

15/19 10.47 11.88 +13.47 5.10 4.59 -10.00 101 109 + 7.92 .4271* .4085* - 4.35*

20/24 14.89 15.81 + 6.18 11.71 11.12 - 5.04 162 198 +22.22 .4105 .4340 + 5,72

25/29 14.21 13.71 - 3.52 14.26 13.57 - 4.84 207 279 +34,78 .4427 .5083 +14,82

30/39 24.22 23.03 - 4.91 28.48 27.90 - 2.04 243 341 +40.33 .4839 .5511 +13.89

40/49 17.36 17.18 - 1.04 21.06 23.49 +11.54 251 385 +53.39 .5142 .5888 +14.51

50/59 10.29 10.05 - 2.33 12.40 12.66 + 2.10 249 355 +42.57 .5367 .6140 +14.40

60/69 4.92 4.49 - 8.74 5.18 4.98 - 3.86 217 312 +43.78 .5580 .6409 +14,85

70 & above 1.66 1.30 -21.69 1.39 1.06 -23.74 173 228 +31.79 .5487 .6265 +14.18 Totals 206 2T27 +36.89 .9c)99 5 +13.70 Notes: Education - A - Illiterates; P - Primary; G - Secondary; C - College; S - Higher. SouRefers to the group 10 - 19. Source: Langoni~, Table 4.14, cited by I. M. Humie, 'FNotes onl the Distribution of Income i-n 3razil, 1 IBRD1, 1972. - 208 -

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