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Human Capital Theory and Education Policy in Australia

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  • John Quiggin

Abstract

The human capital model is the basis of neo‐classical 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.

Suggested Citation

  • John Quiggin, 1999. "Human Capital Theory and Education Policy in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(2), pages 130-144, June.
    • Handle: RePEc:bla:ausecr:v:32:y:1999:i:2:p:130-144
    DOI: 10.1111/1467-8462.00100
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    Cited by:

    1. Beblav�, Miroslav & Teteryatnikova, Mariya & Thum, Anna-Elisabeth, 2015. "Does the growth in higher education mean a decline in the quality of degrees?," CEPS Papers 10258, Centre for European Policy Studies.
    2. Clifford Afoakwah & Isaac Koomson, 2021. "How does school travel time impact children’s learning outcomes in a developing country?," Review of Economics of the Household, Springer, vol. 19(4), pages 1077-1097, December.
    3. Sue O'Keefe & Lin Crase, 2007. "Public sector workers' willingness to pay for education and training: a comparison," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 10(4), pages 279-294.
    4. Andrew Leigh, 2008. "Returns To Education In Australia," Economic Papers, The Economic Society of Australia, vol. 27(3), pages 233-249, September.
    5. Grace Chia & Paul W Miller, 2007. "Tertiary Performance, Field of Study and Graduate Starting Salaries," Economics Discussion / Working Papers 07-12, The University of Western Australia, Department of Economics.
    6. Trofimov, Ivan D. & Baawi, Nurulhana A., 2020. "Human Capital: State of the Field and Ways to Extend the Concept," MPRA Paper 107039, University Library of Munich, Germany.
    7. Malcolm Abbott, 2004. "Regulation of Tertiary Education," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 11(3), pages 223-234.
    8. John Quiggin, 2001. "The Australian Productivity Miracle: A Sceptical View," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 8(4), pages 333-348.
    9. Robert J. Stimson, 2012. "Endogenous Factors in Regional Performance: A Review of Research in Australia," Chapters, in: Charlie Karlsson & Börje Johansson & Roger R. Stough (ed.), The Regional Economics of Knowledge and Talent, chapter 6, Edward Elgar Publishing.
    10. Muhamad Purnagunawan, 2008. "Earning Motivation and The Conventional Earning Function," Working Papers in Economics and Development Studies (WoPEDS) 200805, Department of Economics, Padjadjaran University, revised Sep 2008.
    11. Alla Kirova, 2011. "Evolution of the Human Capital Doctrine," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 94-131.
    12. Roger Dean, 2002. "Economic and Social Benefits of Universities: Policy Implications," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 9(3), pages 275-288.

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