AØKA08209U Economics of Education

Volume 2013/2014
BSc in Economics
MSc in Economics

This course will teach students how to apply economic thinking to education-related questions. In doing so, the class will draw on a wide range of economic principles and apply material learned in the first year. The variety of models and perspectives will range from macro to micro, including labor economics, macroeconomic growth, and public finance. Students will be equipped with an economic toolbox to evaluate education policy issues methodically, and should eventually be able to use these tools to inform education policy. The applications in class will address both primary and secondary education, university/tertiary education, and vocational or on-the-job training, and place the Danish and European experience in an international context. While the course will be based on theory, it is nevertheless of an empirical nature: recent data will be used to evaluate the current situation, and students will work with data in assignments.

Learning Outcome

This course explores why individuals and society invest in education. Education has many private benefits (earnings, employment, health and longevity, consumption value), as well as social benefits (GDP growth, tax income, positive externalities). Education also affects inequality within a generation and across generations. Throughout this course, current policy issues concerning education will be discussed. Economic models will be connected to data that can be used to test the models' implications, and students will learn how models and data can serve to inform education policy.

First, we will introduce human capital theory to study individual decision-making. It will be used to analyze investments in education and how they are affected by ability, comparative advantage, family background, and macroeconomic conditions. We will encounter the empirical problem of disentangling the return to education from the return to innate ability, and investigate how the association between education and individual earnings has changed over time.

At the societal level, we will study the social return to education and the financing of publicly provided schooling. Looking at the production of education, we will ask how educational outcomes are produced by schools, whether more money produces higher student achievement, and which school inputs are more or less effective in producing desired educational outcomes (such as PISA test scores). We will consider the potential of early childhood education in the context of skill-formation over the life cycle. We will also reflect on possible conflicts between societal goals - efficiency, equity, and liberty - that influence decisions about the allocation of education resources.

From a macro perspective, education matters for national economic growth as well as for individual mobility. We will investigate whether there is a risk of over-education, or whether individuals under-invest in light of a rapidly changing economic reality and international competition. We will also study the intergenerational transmission of economic status through parental investments, credit constraints and achievement inequality, and the resulting income distribution.

Textbooks :

  • Belfield, C. R. (2000) Economic Principles for Education: Theory and Evidence, Edward Elgar Publishing, Inc.
  • Checchi, D. (2006) The Economics of Education, CambridgeUniversity Press.
  • Borjas, G. J. (2000) Labor Economics, 2nd Ed., Irwin Mcgraw-Hill.

Additionally, lecture notes may serve as study material, and many academic journal articles will be assigned as readings.

There will be mandatory assignments, which must be approved for students to be able to take the exam.
Students should have taken Microeconomics and Macroeconomics courses corresponding to the 1st year undergraduate sequence in the Department of Economics.
3 hours of lectures during one semester, supplemented with guided practice session.
  • Category
  • Hours
  • Class Instruction
  • 28
  • Exam
  • 3
  • Lectures
  • 42
  • Preparation
  • 133
  • Total
  • 206
7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
A 3 hours written assignment taking place at Peter Bangs Vej 36.
Without aids
Marking scale
7-point grading scale
Censorship form
External censorship
100 % censurship
Exam period
Will be updated before the start of the semester
Same as ordinary. But if only a few students have registered for the re-exam, the exam might change to an oral exams with a synopsis to be handed in. This means that the examination date also will change.
Criteria for exam assesment
The Student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course.