provided free at the point of use and there is an inherent difficulty in measur-
ing the output or productivity of a teacher. A common measure used in much
statistical work is the share of the population in secondary school. This fails to
measure the quality of education (influenced by teacher absenteeism), those
instances where official enrolment rates are very different from the actual
number of children in school or workplace learning on the job.
Many of the benefits from education are non-material and fall on those other
than the person receiving education (what are called externalities). All of these
will be hard to capture in any statistical test of the link between education and
growth. Among the many examples are that women’s education impacts fertil-
ity (Drèze and Murthi, 2001), children’s education (Bhat, 2002) and child
health (Haddd et al., 2003). Education also enhances the ability of an individ-
ual to participate in wider social processes. A person may benefit from educa-
tion through reading, communicating, arguing, being able to choose in a more
informed way and being taken more seriously by others, all of which may be
independent of that person’s income. Work by Craig Jeffrey (2012) on educa-
tion in North India shows that parents often value education for their children
in the belief it will giv e them the social awareness,confidence and good
manners to be more socially mobile. All these findings see education not just
as a means to an end, with humans as inputs into the process of production, but
also as an important end goal of what makes a good society.
Nevertheless, studies have found a consistently positive relation, in both
developed and developing countries, between education and higher individual
incomes. One such study used data for 1994 to 1998 from 23 countries that
participated in common educational testing of adults between the ages of 16
and 65 (Hanushek and Woessmann, 2009). An obvious conclusion is that
expanding education should boost GDP. And,if there are positive externalities
from the individual acquisition of education (as discussed above), then total
incomes should rise even more.
Empirical results at the aggregate level of the entire economy often fail to find
these positive effects. One influential study found that the growth in educational
capital had a negative relationship with the growth of GDP and productivity
(Pritchett,2001). The result persisted if only developing countries were used, all
observations from Sub-Saharan Africa were excluded and when using different
estimates of educational capital. These extra tests implied that the result was
‘robust’ and did not depend on a few odd examples or an unusual historical time
period. Iqbal and Zahid (1998), studying education and growth in Pakistan, find
that various measures of education including primary, secondary and high-
school enrolment are either insignificantly or negatively related to GDP growth.
There are three possible explanations for this paradox – sometimes called
the ‘Pritchett Dilemma’. First, that education does raise individual productiv-
ity but that labour is allocated to jobs that pay a good salary but are socially
wasteful activities such as working in an inefficient or corrupt public sector.
Second, that the expansion of the supply of educated labour when demand is
stagnant could cause the rate of return to education to fall rapidly. In many
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