Walter W. McMahon

The Cost Structure of American Research Universities

This study estimates translog variable cost functions for 147 American doctorate granting universities, accounting for three major products of these institutions: undergraduate and graduate instruction, and research. Explicit measures of research output and quality are employed. Evidence is found for considerable economies of scale for the average institution, as well as economies of scope related to the joint production of undergraduate and graduate instruction. The public or private ownership of an institution is not significant for the explanation of variable costs. The intensity of state regulation in the public sector does not have a significant impact on production efficiency. Copyright 1991 by MIT Press.

Education and Growth in East Asia.

Abstract In the new endogenous growth and augmented Solow models, human capita is central to the growth process. Its role in the diffusion of knowledge and technology offsets the diminishing returns to physical capital that otherwise occurs. Per capita output thereby grows, given appropriate policies, without bounds. This paper applies production functions with education externalities to the rapidly growing countries of East Asia. It tests for the net effects of differences in policies concerning enrollments vs expenditures at each level, and for feedbacks through the effect of education on rates of physical capital investment. It finds that since most countries had universal primary education early, the rate at which secondary education expanded (necessary to successful exports), was crucial in achieving high rates of investment and high per capita growth. Secondary and higher education expenditures are more significant after primary enrollments are universal. There is evidence of convergence within the region. [ JEL 011, 047, 053, 120]

Conceptual Framework for the Analysis of the Social Benefits of Lifelong Learnings

This paper systematically identifies the market and non-market returns to education over the life cycle of gruaduates, as well as the social benefits externalities. It considers the most recent developments in the measurement and the valuation of these returns to additions to existing provisions for education and relates them to the costs. This is within the conceptual framework for lifelong learning defined by the graduates life cycle, given that the capacity of graduates to learn later and to adapt is correlated with their prior schooling. The paper suggests that the capacity to finance lifelong learning depends on the capacity to identify and credibly measure these net social and private benefits, some of which are not well known and about which there is also misinformation. It also concludes that the capacity to finance education depends on political processes, which therefore are analyzed also, and on the capacity to build broad-based coalitions using knowledge about these marginal products.

The Social Outcomes of Education and Feedbacks on Growth in Africa

Most of the effects of education included in the complete model presented here are shown to be consistent with those found in the mainstream of the research on each outcome using microeconomic data. This, however, is a first effort to estimate net education effects more comprehensively, beyond just growth and health effects on other key measures of development in Africa, and also a new view of indirect feedbacks on economic growth and of externalities. After developing the conceptual framework, the regression estimates are presented together with a discussion of the net direct and indirect effects of education on each outcome. These are shown to improve infant mortality, increase longevity, strengthen civic institutions and democratisation, increase political stability, and increase investment in physical capital, which in turn have positive delayed feedback effects on the economic growth process. The effects also lower fertility rates and population growth rates but the latter occurs only after long delays because of the short-term positive effects of education on health. There are significant net education effects reducing poverty, inequality and crime, the latter after netting out negative externalities from growth and white-collar crime. Education effects reducing poverty and substituting skills for extractive exports also contribute to environmental sustainability. Simulations solve the complete model endogenously and iteratively over time for all of the direct and indirect (largely externality) effects. They reveal that indirect feedback effects including those on non-market outcomes are larger than the direct effects. Some effects are immediate, but many of the lags are long. So policy options for a continent in crisis that consider these lags are considered.

Geographical Cost of Living Differences: An Update

This article develops a method for estimating current geographical differences in the cost of living index for all states for 1981-1990. These estimates based on BLS data are shown to correspond closely to statewide cost of living estimates for 1989 based on the American Chamber of Commerce Research Association data for selected cities.Living costs are highest in Hawaii, Alaska, Connecticut, Washington D.C., New Jersey, Massachusetts, New York, and California. They are lower in Mississippi, West Virginia, Arkansas, Idaho, and Utah. The basic pattern persists since 1977 with shifts related to economic growth rates. Copyright American Real Estate and Urban Economics Association.

Relative returns to human and physical capital in the U.S. and efficient investment strategies

Abstract This paper presents new estimates of the social rates of return to a high school and to a 4-year college education for males and females in the U.S. for each year from 1967 to 1988 based on microeconomic data from U.S. Census Bureau surveys. These are compared with the real rates of return to investment in plant and equipment and in housing since 1947. Results reveal drastic declines in returns to a junior high school education for those who leave (from 21 to 7%), steady rates of return to a high school education averaging 12%, and real rates of return to the college level rising gently to 12–14% levels in the late 80s, with a dip in the mid 70s. Rates of return to housing, including capital gains, were only 5% in this period, compared with 15% for plant and equipment investment.

The relation of education and R&D to productivity growth in the developing countries of Africa

Abstract This paper focuses on the returns to investment in human capital in the form of investment in primary and secondary education, and in technology transfer via higher education and physical capital in 30 of the poorest countries of Africa. It specifies a production function and controls over the 1970–1985 period for investment in physical capital, drought, oil price shocks, different labor utilization rates, and Anglophone-Francophone differences. The results find high 21.2% rates of return to investment in primary and secondary education. Population growth lowers the growth of output per capita. A method is suggested for estimating rates of return for the 18 countries for which individual rate of return studies do not exist.

The relation of education and R&D to productivity growth

Abstract This paper considers the relation of education and of scientific and technical knowledge developed through R&D to labor productivity growth within the medium term. It is unique in using a total capital approach that includes both private and public physical, human, and knowledge capital formation and in use of a medium term model for determining productivity growth that includes both demand side and supply side effects. Empirical results for the U.S. and 14 other major OECD nations for 5-yr time periods from 1955 through 1980 find education as measured both by the average educational attainment of the labor force and by the percentage of advanced level graduates who bring technology to bear on production to be significant determinants of productivity growth. Gross investment in physical capital also transmits the R&D and has a positive influence, as do higher utilization rates and the technology transfer associated with lower initial productivity levels.

Expected Returns to Investment in Higher Education

The effects of college tuition costs on early career educational, occupational and economic achievements were estimated for a national sample of black and white college students. The findings suggest that attending a relatively high tuition college has a ...

Universal basic education: An overall strategy of investment priorities for economic growth

Abstract This paper presents a summary of research on key aspects of the indirect effects of expanding education from grade 6 through grade 9, followed by a comprehensive analysis of social rates of return to investment in all levels of education in Indonesia and underemployment in urban and rural areas. The latter analyses the 1982 and 1986–1989 nationwide SAKERNAS data on individuals including earnings, level and type of education, and hours worked. Indirect effects, effects on productivity in agriculture and the effects on pupil and intergenerational equity are also considered. The analysis finds that consistently relatively high social rates of return are available to investment in expanding junior secondary general education (grades 7–9). Rates of return to senior secondary general and vocational education are also high. but falling. Underemployment is highest among illiterates, but virtually all males and females now finish grade 5.