ECONOMICS OF EDUCATION
Martin Carnoy
Stanford University
Course Objectives: The broad goal of this mini-course is to introduce you to economic analysis
of education.
We will cover five broad areas of the economics of education:
1. Education and labor markets: human capital theory and its critics.
2. Education and economic growth: how the quantity and quality of education in the labor
force may contribute to economic growth.
3. The production of schooling: how economists analyze the effectiveness of schooling
4. The role of teachers in school production: teacher labor markets and teacher incentives.
5. The economics of higher education, with a focus on financing: how economists analyze
some issues in higher education.
General overview readings are:
Levin, Henry M. "Mapping the Economics of Education: An Introductory Essay," Educational
Researcher, May, 1989.
Carnoy, Martin. “Policy Research in Education: The Economic View.” Stanford University,
2007.
The readings for each of the five areas are the following:
1. Education and labor markets
Module 2 of the Economics of Education “Human Capital, Wages, and the Distribution of
Income,” “Age-Earnings Profiles,” and “Age Earnings Profiles and the Value of Human Capital.”
Murphy, Kevin and Welch, Finis, "Wage Premiums for College Graduates: Recent Growth and
Possible Explanations," Educational Researcher, May 1989, pp. 17-26
2. Education and economic growth
Robert Barro. 1991. “Economic growth in a cross-section of countries.” Quarterly Journal of
Economics.
Eric Hanushek and L. Woessmann. 2008. “The Role of Cognitive Skills in Economic
Development,” Journal of Economic Literature.
3. The production of schooling
Clotfelter, C, Ladd, H, and Vigdor, J. (2007). “How and Why do Teacher Credentials Matter for
Student Achievement?” NBER Working Paper 12828.
McEwan, P. and M. Carnoy (2000). “The Effectiveness and Efficiency of Private Schools in
Chile’s Voucher System.” Educational Evaluation and Policy Analysis, 22, 3 (fall).
4. Teacher labor markets and teacher incentives
Module 4, The Economics of Education. “Important Issues” and the “Supply and Demand for
Teachers,” “Teacher Salaries,” and the “Teacher Career Paths and Mobility.”
Lankford, H., Loeb, S., and Wyckoff, J. (2002). “Teacher Sorting and the Plight of Urban
Schools: A Descriptive Analysis.”
5. The economics of higher education
Turner, S. “Going to College and Finishing College.” 2007.
Hansen, W.L. and Burton Weisbrod. 1969. “The Distribution of Costs and Direct Benefits of
Public Higher Education: the Case of California.” Journal of Human Resources, 4, 2: 176-191.