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Why should governments intervene in education, and how effective is education policy

  • Marc van der Steeg

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    This paper reviews arguments for government interference in the education sector and discusses the effectiveness of commonly used policy instruments. There are both efficiency and equity reasons for government intervention. Particular attention is paid to education spillovers (an efficiency motive). The empirical literature shows that there is little reason to argue for additional policy efforts to correct for externalities. There is some promising evidence, however, for non-pecuniary spillovers in the form of crime reduction and health improvements. With regard to the effectiveness of policy instruments, the paper discusses studies with a (quasi-)experimental design so that the causal impact of the policy can be identified. Early childhood interventions appear to be more effective than interventions in later stages of the education cycle.

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    File URL: http://www.cpb.nl/sites/default/files/publicaties/download/memo1220.pdf
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    Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Memorandum with number 122.

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    Date of creation: Jul 2005
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    Handle: RePEc:cpb:memodm:122
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    3. Erik Canton & A. Blom, 2004. "Do student loans improve accessibility to higher education and student performance? An impact study of the SOFES program in Mexico," CPB Discussion Paper 33, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Andrea Bassanini & Stefano Scarpetta, 2001. "Does Human Capital Matter for Growth in OECD Countries?: Evidence from Pooled Mean-Group Estimates," OECD Economics Department Working Papers 282, OECD Publishing.
    5. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change And Wage Inequality," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1055-1089, November.
    6. Janet Currie & Enrico Moretti, 2003. "Mother'S Education And The Intergenerational Transmission Of Human Capital: Evidence From College Openings," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1495-1532, November.
    7. Richard Blundell & Lorraine Dearden & Costas Meghir & Barbara Sianesi, 1999. "Human capital investment: the returns from education and training to the individual, the firm and the economy," Fiscal Studies, Institute for Fiscal Studies, vol. 20(1), pages 1-23, March.
    8. Barbara L. Wolfe & Robert H. Haveman, 2002. "Social and nonmarket benefits from education in an advanced economy," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 47(Jun), pages 97-142.
    9. Daron Acemoglu & Joshua Angrist, 1999. "How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws," NBER Working Papers 7444, National Bureau of Economic Research, Inc.
    10. David Autor & Lawrence Katz & Alan Krueger, 1997. "Computing Inequality: Have Computers Changed the Labor Market?," Working Papers 756, Princeton University, Department of Economics, Industrial Relations Section..
    11. Dynarski, Susan, 2001. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," Working Paper Series rwp01-034, Harvard University, John F. Kennedy School of Government.
    12. Carneiro, Pedro & Heckman, James J., 2003. "Human Capital Policy," IZA Discussion Papers 821, Institute for the Study of Labor (IZA).
    13. Ciccone, Antonio & Peri, Giovanni, 2002. "Identifying Human Capital Externalities: Theory with an Application to US Cities," CEPR Discussion Papers 3350, C.E.P.R. Discussion Papers.
    14. Julie Berry Cullen & Brian A. Jacob & Steven Levitt, 2003. "The Effect of School Choice on Student Outcomes: Evidence from Randomized Lotteries," NBER Working Papers 10113, National Bureau of Economic Research, Inc.
    15. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    16. Angrist, Joshua D. & Guryan, Jonathan, 2008. "Does teacher testing raise teacher quality? Evidence from state certification requirements," Economics of Education Review, Elsevier, vol. 27(5), pages 483-503, October.
    17. Angrist, Joshua & Lavy, Victor, 2002. "The Effect of High School Matriculation Awards: Evidence from Randomized Trials," CEPR Discussion Papers 3827, C.E.P.R. Discussion Papers.
    18. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
    19. Daron Acemoglu & Kenneth Rogoff & Michael Woodford, 2009. "NBER Macroeconomics Annual 2008, Volume 23," NBER Books, National Bureau of Economic Research, Inc, number acem08-1, August.
    20. Erik Canton & Bert Minne & Ate Nieuwenhuis & Bert Smid & Marc van der Steeg, 2005. "Human capital, R&D, and competition in macroeconomic analysis," CPB Document 91, CPB Netherlands Bureau for Economic Policy Analysis.
    21. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
    22. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule To Estimate The Effect Of Class Size On Scholastic Achievement," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 533-575, May.
    23. Michèle Belot & Erik Canton & Dinand Webbink, 2007. "Does reducing student support affect scholastic performance? Evidence from a Dutch reform," Empirical Economics, Springer, vol. 32(2), pages 261-275, May.
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