Human Capital Theory and Education Policy in Australia
Quiggin, John (1999) Human Capital Theory and Education Policy in Australia.
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Human Capital Theory and Education Policy in Australia
The human capital model is the basis of neoclassical analysis of labour markets, education and economic growth. However, education policy in Australia has been influenced by
models based on screening theory and public choice theory which yield the policy implication that reductions in education spending are generally desirable. In this paper, the competing
models, and the evidence supporting them, are surveyed. It is concluded that the human capital model is strongly supported by the available evidence. The predictions of screening models are
generally not supported by empirical tests, except where they coincide with those of the human capital model. The main evidence supporting the public choice model, derived from the
literature on educational production functions is shown to be deficient. The principal policy conclusion of the paper is that the negative effects of recent cuts in education spending will
outweigh any benefits achieved through reductions in public debt.
Public choice theory
340209 Public Sector Economics
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Later published as Quiggin, J. (1999), 'Human capital theory and education policy in Australia', Australian Economic Review 32(2), 130-44.