HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Eonomi Development in Asia
Human Resoures: Eduation, Health and Labor
Tomoki Fujii
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Outline
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Human Capital Investment: From general framework of
investment deision-making
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Investment deision making
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Health and Inome
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Costs and Benets of Eduation
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Gender
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Migration
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Human Capital Investment
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Not everyone is equal in produtivity. People differ in their
produtivity.
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Physial strength
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Cognitive skills
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Communiation skills
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Appearane
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Some of these differenes are geneti.
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People an investment in their
:::::::::::::::
.
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Health
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Eduation
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Voational training
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Investment Deisions
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Investment deisions involve both ost and benet
onsiderations. Let the size of investment be x.
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B
0
(x) [C
0
(x): benets [ost from investment of size x.
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Minimum investment size, dereasing marginal benet
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Fixed ost of investment, onstant marginal ost
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NB
0
(x) = B
0
(x) C
0
(x): Net benet
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When net benet is
maximized,
:::::::::::::
, or
B
0
0
(x) = C
0
0
(x).
x
$ B(x)
C(x) NB Maximized
Fixed cost of
investment
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Food intake as investment
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Let F be the amount of food you
onsume.
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Output I(F ) is produed.
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Cost of food C(F ) is proportionate to
F .
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Suppose that you want to maximize the
surplus I(F ) C(F ).
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Applying the previous model, a rational
individual would hoose investment
level F
to maximize the surplus.
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If the individual is redit onstrained
and start from F < F
1
, the F would
onverge to zero.
F
C(F)
Maximized
Surplus
F* F0
F1
$
I
This an be
onsidered nutrition
poverty trap (More
on poverty trap in
Le. #5).
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Child Malnutrition (1)
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The previous model is oversimplied, but it does show the
possibility of poverty trap.
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Note that a sizable proportion of spending typially go to
non-food spending.
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See also Chap. 2 of Banerjee and Duo.
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More realisti dynami interpretation would be as follows:
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You are poor beause you were malnourished as a hild.
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Sine you are poor, your hildren are also malnourished.
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In fat, hild malnutrition is important as it has serious
long-term negative effets (See, Grantham-MGregor et al.
(2007)):
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Height lost due to malnutrition annot be reovered.
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Cognitive skills are negatively affeted by malnutrition.
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Malnutrition an result in permanent disability.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Child Malnutrition (2)
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So far, we only onsidered only the lak of food intake.
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Insufient energy intake indeed leads to malnutrition.
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Deieny of mironutrients are also important.
I
::::::
deieny: Can lead to goiter (abnormally enlarged
thyroid gland) and mental retardation.
I
::::
deieny: Can lead to anemia. Assoiated with
poorer mental, motor, soio-emotional or neurophysiologi
funtioning.
I
:::::::::
deieny: Can result in blindness.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Child Malnutrition (3)
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Lak of adequate hild are also leads to malnutrition.
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Pratie good hygiene (wash hands; use lean utensils,
ups and bowls; store food properly)
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Pratie responsive feeding
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Adequate stimulations
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Diseases also leads to malnutrition. Major issues inlude:
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::::::::
(Esp. prevalent in the rst two years of life. About
1/4 to 1/3 of the observed growth failure is attributable to
enteri infetions (Brown, 2003).)
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:::::::
(Inreased risk of death and neurologial and
ognitive impairments)
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Intestinal parasites (Poor language performane)
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HIV/AIDS (Higher mortality, brain problems and inreased
risk of development retardation)
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Magnitude of the hild malnutrition
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Grantham-MGregor et al. (2007) estimate that 28% of
hildren under ve in developing ountries are stunted.
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Prevalene of malnutrition is highest in South Asia and
Sub-Saharan Afria.
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These hildren are prevented from realizing their
developmental potential beause of malnutrition.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Health and inome (1)
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Overall health indiators generally improve as the ountry
develops.
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People grow taller as the ountry get riher.
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Men's average height in Great Britain rose by 9.1 m
between 1775 and 1975.
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Prop. of young Duth men shorter than 168m fell from 2/3
in 1855 to 2% today.
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Just in a entury, average height of Japanese men at the
age of 18 inreased by 13m. Height is very losely
orrelated with the inome level (see above).
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Height is indeed related to produtivity.
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In Brazil, where malnutrition is extensive, a 1% differene in
height is assoiated with a 7.7% differene in wages. In US,
a 1% differene in height is assoiated with a 1% differene
in wages.
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Morbidity, mortality and life expetany are also often used.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Health and inome (2)
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Cross-ountry relationship
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In rih ountries, life expetany ranges approximately
between 75 and 80 years, while most of the poorest
ountries have a life expetany below 60 years.
I
In Latin Ameria, the rihest 20% has per-apita food
onsumption that is 50% larger than that of the poorest
20% of the population.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Interation of Health and Inome (1)
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Better health ausing higher inome
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If you are too unhealthy, you annot work.
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In the UK, the poorest 20% adults in 1780 were so badly
nourished they did not have the energy for even one hour of
manual labor per day. By 1980, suh malnutrition had been
ompletely eliminated, ontributing to the inrease of output
by 25%.
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Inreased alori intake ontributed to further 56% inrease
in the amount of labor input that ould be provided. These
effets ombined, better nutrition raised output by a fator
of 1:25 1:56 = 1:95 over 200 years, or 0.33% per year,
a
ording to Fogel (1997).
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But the reverse ausality is possible.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Interation of Health and Inome (2)
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Higher inome ausing better health
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Riher people an afford sufient amount of food, lean
water, mediine, better and safer living and working
environment, and better health servies.
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Average number of dotors per 1,000 people is 2.2 in rih
ountries, 0.8 in the world, and 0.3 in sub-Saharan Afria.
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A third fator orrelated with health and inome (e.g.,
ommuniation and transportation infrastruture)
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Improved road helps market a
ess of a remote village.
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This an help inrease the inome level of the village.
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At the same time, the patients an reah the nearest lini
more easily.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Modeling Inome to Health
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Health h(y; a) and inome
y(h; b).
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Parameters a and b affet
only
:::::::
and
::::::::
respetively.
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You an think of a as
a
ess to lean water and
b as prodution tehnology.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Exogenous Inrease in Produtivity
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Consider an exogenous
tehnologial progress so
that the parameter value
hanged from b to b'.
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For every h, we have
y(h; b
0
) > y(h; b). This
shift orresponds to the
arrow on the graph.
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Health and inome move
from point A to point C.
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A to B: Due to exogenous
shift in tehnology.
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B to C:
::::::::::::::::::::::::
.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Eonomi and Poliy Impliations
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Health and nutrition are important.
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Eonomi ost of ill-health and malnutrition is sizable.
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Grantham-MGregor et al. (2007) estimate that average
deit in adult yearly inome for stunted/poor hildren to be
19.8%.
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Further, poor health and nutrition an sustain existing
inequality in soiety.
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Government an onsider health and nutrition
interventions for two reasons (Engle et al., 2007)
I
:::::::::
: As shown earlier, efient level of onsumption
may not be reahed. Better health and nutrition may pay
themselves and lead to faster growth. Also, subsidizing
preventive measures of infetious diseases makes
eonomi sense beause it helps to internalize the negative
externality of infetion.
I
::::::
: Children fae unequal opportunities.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Implementation Issues (1)
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When implementing health and nutrition poliies, a number
of problems may o
ur (See, Chap 3 of Banerjee and
Duo).
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There are a number of (potentially) fruitful preventive
measures in health and nutrition.
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For diarrhea, we have hlorine bleah (for purifying water),
and sugar and salt (key ingredients of oral dehydration
solution).
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For malaria, we have insetiide-treated bed net.
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Others inlude deworming drugs, exlusive breast-feeding
for the rst six months, iron-fortied our against anemia,
and so on.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Implementation Issues (2)
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However, these measures may not be used even when
they are provided for free.
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Banerjee and Duo argue that ertain faith/beliefs prevent
people from adopting them or hanging behavior.
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But some nudging may help.
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For example, those who are inentivised to buy their rst
bed nets are more willing to pay the seond one at the full
prie than those who paid the full prie for their rst bed
nets.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Eduation as human apital investment
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Investment that inreases one's mental ability is also an
important form of investment in human apital.
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Fous on formal eduation, but informal eduation and
training are also important.
I
The level of eduation has inreased in both developing
ountries and developed ountries between 1960 and
2000.
I
Yet, 34% of the adult population in the developing world had
no eduation at all.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Determination of the level of eduation
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How is the level of eduation determined? A
ording to the
model of investment
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Cost: higher ost of eduation
:::::::::::
eduation level.
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Benet: higher returns to eduation enourages eduation.
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Disount rate: higher disount rate
:::::::::::
eduation
level.
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Most the (high-shool/ollege) students are
::::::
.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Cost of Eduation
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In 2000, the US government spent $443 billion on
eduation, and private individual spent another $164
billion, totaling 6.2% of GDP.
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The
:::::::::::::::::
of eduationthe forgone wages
while people are being eduatedare not inluded.
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One estimate is that the opportunity ost is roughly equal
to all other eduational spending in the US. So, total ost of
investment in eduation is 12.4% of US GDP in 2000.
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Corresponding gure for the investment in physial apital
was 17.9%.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Benets of eduation
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Investment in physial apital entails returnsapitalists
are willing to pay for mahines beause they an produe
more with more mahines.
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We an measure how muh of a return a piee of physial
apital ommands in the market.
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We an similarly nd the return to eduation by the
inrease in wages that a worker would reeive from one
additional year of shooling.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Measuring Return on Eduation (1)
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Typially, the return on (additional year of) eduation is
alulated as follows :
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First, the logarithmi wage is regressed on the number of
years of eduation (or more ompliated form of eduation
variable), experiene and possibly other orrelates.
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The estimated oefient on the number of years of
eduation show how muh more wage you ould earn from
one more year of eduation (Minerian Rate of Return).
Then, you have an estimate of the annual stream of
additional earnings over the ourse of life.
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Then, estimate the additional ost of eduation and the
annual stream of forgone wage due to one additional year
of eduation.
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One the stream of osts and benets assoiated with one
more year of eduation is found, you an alulate the
internal rate of return and the net benet in present value.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Measuring Return on Eduation (2)
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However, the Minerian rate of return equals the internal
rate of return under some assumptions.
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We onsider a very simple version here. See Hekman et
al. (2003) for more thorough treatment.
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Suppose that everyone has the same ability, lives forever
and the same interest rate r.
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In eah period, eah individual an study or work. Assume
that eduation is ostless.
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The wage depends only on the level of eduation E. So,
the wage rate an be given by w(E).
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Everyone tries to maximize the present-value lifetime
earnings
:::::::::::::::::::
.
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Note that the summation starts from t = E.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Measuring Return on Eduation (3)
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If there are too little eduated people, the wages for
eduated people would be very high.
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Hene, more and more people would get eduated.
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In an equilibrium, I(E) should be equated for all the
eduation levels, so that
:::::::::::::::::
.
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Notie here that we an rewrite
I(E) = w(E)
(1+r)
E
1
1
1+r
= w(E)
(1+r)
(E1)
r
, sine I(E) is a
sum of a geometri sequene.
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Therefore,
:::::::::::::::::::::::::
, and hene
lnw(E) = lnw(0) +E ln(1 + r).
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Measuring Return on Eduation (4)
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ln(1 + r) is the ontinuous-time version of the disount
rate, but for a small r, ln(1 + r) r.
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If we observe w and E, we an estimate r (or ln(1 + r)).
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In this model, the internal rate of return on eduation is
equal to the interest rate.
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Notie that we an estimate r without the observed interest
rate.
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A more ompliated version of the Miner model
inorporate the training after formal shooling.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Measuring Return on Eduation (5)
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Table below is taken from Psaharopoulos (1994). Hall and
Jones (1999) [ited in Weil used the gure for
Sub-Saharan Afria (13.4%) for the returns to eduation for
the rst four years, the world average (10.1%) for the next
four years and the OECD (6.8%) for eduation beyond 8
years.
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Using these numbers, we an nd the effet of eduation
on wages.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Effet of Eduation on Wages
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Using the numbers in the
previous slide, we an
draw the graph on the
right.
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For example, if you have
four years of eduation,
you would earn more than
those without eduation by
the fator of
(1:134)
4
= 1:654
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If you have eight years of
eduation, the ratio is
:::::::::::::::::::::::::
.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Shooling and Wages
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As the following table shows, a majority of people in
developing ountries have not ompleted primary
eduation whereas a majority of people in advaned
ountries have at least some seondary eduation.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Rate of Return to Eduation
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Psaharopoulos (1994) also alulates the IRR for
eduation
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High rates of return to eduation at all levels.
I
:::::::::::
returns, i.e. tertiary eduation has lower
returns per dollar invested than seondary eduation.
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The highest returns are on
::::::::
eduation.
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Note that the private and soial returns are different:
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Private alulations are based on the
:::::::::::::
ost,
whereas soial alulations onsider the osts paid by the
government and external effet (next).
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
External Effet
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Shooling is onsidered to have positive external effet.
That is, other people benets from your shooling.
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What are the possible benets?
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the value of being able to vote intelligently
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follow the rules set down by soiety
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make possible ontributions to soiety through ulture,
siene, soial siene and the arts that exeed private
returns of the individual.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Poliy impliations
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Given relative high returns to eduation investment, why
don't people invest more?
I
Eduation is ostly and poor people are redit onstrained.
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People don't see the benets or have misguided beliefs
about the returns to eduation.
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Then, inentivising may help (e.g.,
::::::::::::::::::::::::
suh as PROGRESA).
I
But, when the lak of inome is the major obstale,
unonditional ash transfer also would help.
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See also Chap 4 of Banerjee and Duo.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Quality of Shooling (1)
I
So far, we only looked at the number of years of shooling.
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However, one year of primary eduation in Singapore is not
equal to one year of eduation in Cambodia, for example.
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Quality of shooling is not easy to measure, espeially in a
manner that allows international omparison.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Quality of Shooling (2)
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In 1997, the student/teaher ratio in primary shool among
developed ountries was 16.7. In developing world, the
ratio was 29.7. In Afria, it was 34.2.
I
The teahers in developing ountries are not as well
trained as those in developed ountries.
I
In Mozambique, 70% of the teahers in grades 1-5
themselves have only seven years of shooling.
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In many developing ountries, textbooks, lassrooms and
teahers are all sare.
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Students are able to learn less in a year in poor ountries
beause of the widespread health problems.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Output of Shooling
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The standardized
test sores tend
to be better in
rih ountries.
I
Japan, China and
Four Tigers
tended to do well
for the given level
of inome.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Modeling Growth with Human Capital
I
Now let us take into a
ount the differenes in the quality
of labor.
I
Suppose that eah worker supplies h units of labor. The
ountry has K units of apital and L units of worker.
I
The total labor input is hL. So, the output is
Y = AK
(hL)
1
.
I
Remember k = K=L. Then, dividing both sides of the
equation above by L, we have: y = Ak
h
1
.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Finding the Steady State
I
Let us now nd the steady state.
I
Suppose the rate of depreiation is , and the rate of
investment (=saving) is .
I
Then, the hange in the apital per worker is:
k = y k = Ak
h
1
k.
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So, apital grows faster when h is larger and thus the
output grows faster when h is larger.
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Now, onsider a steady state, whih o
urs when k = 0.
I
So, we have:Ak
h
1
k = 0.
I
Therefore, k
SS
= [Ah
1
=
1=1
= h[A=
1=1
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Steady State Output
I
So, we have found the steady state apital per worker k
SS
.
I
To nd the output per worker, we just need to plug this in
y = Ak
h
1
. So,
y
SS
= A(k
SS
)
h
1
= A(h[A=
1=1
)
h
1
= A
1=1
[=
=1
h
:
I
So, the steady state output per worker is proportional to
the value of h.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Numerial Example
I
Let us use the gures in the previous slide (Shooling and
Wages).
I
Let ountry i have average shooling of 12 years and
ountry j have average shooling of 4 years (and they are
otherwise equal).
I
Then, the ratio of the steady state level of inome for these
two ountries are:
y
SS
i
=y
SS
j
= h
i
=h
j
= 3:16=1:65 = 1:92.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Child Labor and Eduation (1)
I
The returns to eduation we have disussed are the
average returns to eduation.
I
However, they may vary from individuals to individuals.
I
Poor families may have lower private returns to eduation
beause the opportunity ost is higher.
I
That is, the hildren may be working if they are not in
shool.
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On the other hand, the rih hildren would not be working if
they are out of shool.
I
Then, hildren in the poor families tend to have lower
eduation, leading to the persistent inequality.
I
Poliy interventions neessary?
I
hild labor tends to disappear as the eonomy grows. But,
this takes time.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Child Labor and Eduation (2)
I
Ray (2000) tests the
:::::::::::::::
(a family sends the
hildren to the labor market only if the family's inome from
non-hild-labor soures drops very low).
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In Pakistan, he nds that poverty is positive assoiated
with hours of hild labor and negatively assoiated with
hild shooling. Hene, the luxury axiom is onrmed.
I
When a Pakistani household falls into poverty, eah hild's
involvement in the labor market is inreased by
approximately 500 hours.
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The shooling is also redued, and the redution is higher
for girls than boys.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Child Labor and Eduation (3)
I
In Peru, there is no empirial support for the luxury axiom.
I
The differene between Pakistan and Peru may be due to
(i) the lak of good shools in Pakistan and (ii) the fat that
Peruvian hildren ombine employment and shooling.
I
Ray (2000) also shows the eduation of adults, espeially
mothers, positively inuene hild labor and shooling.
I
This linkage is partiularly strong in Pakistan, leading to a
viious yle of reeiving little eduation.
I
He argues that a large and sustained investment in adult
eduation and shooling infrastruture will be neessary to
break this yle.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Takling hild labor
I
One ould think of banning hild labor.
I
Most agree there should be a minimum rule (e.g. Children
should not be working in exploitative or ruel onditions).
I
However, banning hild labor altogether may not be the
best interest of the hildren.
I
With the earnings from the hild labor, hildren may be able
to obtain nutrition and eduation they annot get otherwise.
I
Most working hildren work at home, and it thus would be
difult to enfore the ban.
I
Improving the shooling infrastruture and reduing the
ost of shooling (esp for the poor) help redue hild labor.
I
In PROGRESA program in Mexio, parents are given ash
transfers (and other benets) when hildren ontinue to
attend shool.
I
In other words, parents have stronger inentive to send
hildren to shool in this program.
I
This, in turn, means the problems with monitoring do not
arise.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Gender
I
Gender disparity is observed in many soioeonomi
indiators (suh as shooling and wages) in many
developing ountries, and this disparity is often persistent.
I
Asia is relatively equal among developing ountries, while
South Asia has a high level of disparity a
ording to the
index of gender equality index [b/w 1 (low equality) and 4
(high equality) (World Bank, 2001).
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Labor market disrimination
I
One obvious differene the wage. Why?
I
There may be gender differenes due to the differenes in
the produtive harateristis (eduation, work experiene,
et).
I
In developing ountries, women are on average less well
eduated than men.
I
Observed differenes in o
upation, job titles, or wages
aross the gender may be due to the differenes in
distribution of the produtive harateristis.
I
Labor market disrimination
I
Workers who have idential produtive harateristis are
treated differently beause of the group (e.g., gender, rae,
et.) they belong to.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Consequenes of disrimination
I
Setting aside the issues of fairness and morality,
disrimination leads to eonomially inefient outome.
I
If the employer replaes a less produtive man with a more
produtive woman, the employer an be more protable.
I
Those who are not disriminated against may beome
worse off, one disrimination is removed.
I
However, they an be potentially ompensated.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Gender inequality in eduation (1)
I
There is a large gender disparity in shooling in many
developing ountries.
I
What happens as a result? Consider the argument of
Klasen (2000). Assuming...
I
Boys and girls have a similar distribution of innate abilities.
I
Children with more abilities are more likely to reeive
eduation
I
Then, less able boys than girls have the hane to be
eduated in the presene of gender inequality.
I
If the amount of human apital of a person is the outome
of a ombination of innate abilities and eduation, gender
inequality in eduation would lower the average level of
human apital in the eonomy and therefore
:::::
eonomi growth.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Gender inequality in eduation (2)
I
The previous argument is supported by empirial evidene.
I
In many developing ountries, marginal returns to
eduation are higher for girls than for boys, probably
beause of the seletion effet and delining marginal
returns to eduation.
I
The annual growth in poorer regions ould have been up to
0.9 perentage point faster, if these regions had started
with more balaned eduation ahievements in 1960 and
done more to promote gender-balaned eduation growth.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Gender inequality in eduation (3)
I
The reverse ausality is also possible.
I
Eonomi development may help to promote gender
equality.
I
Higher expeted rate of return to human apital and
inreased inentives to invest in girls
I
Labor market for women
I
Better infrastruture.
I
Impat depends on the state of rights, a
ess to and
ontrol of produtive resoures and politial voie (World
Bank, 2001).
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Poliy Impliations
I
There are several areas that World Bank (2001)
addresses:
I
Promote gender equality in a
ess to produtive resoures
and earning apaity. (e.g. make the ost of shooling
heap to inrease private returns)
I
Reduing the personal osts to women of their household
roles. (e.g. Low-ost hild are)
I
Provide gender-appropriate soial protetion (e.g. Take into
a
ount the gender differenes in risk and vulnerability)
I
Strengthening women's politial voie and partiipation
(e.g. Minimum number/proportion of politial parties'
andidates or of eletoral seats in national or loal
assemblies)
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
International Migration (1)
I
Migration an be also onsidered as investment.
I
You inur an initial investment ost assoiated with moving.
There may be additional psyhi osts as well.
I
One you move, you may gain from better job opportunities
and better living environment.
I
Why do people migrate?
I
Politial reasons
I
Employment / business opportunities
I
Insurane motives.
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
International Migration (2)
I
Eonomially, if people are free to move, they move to their
advantage.
I
As a result, the wage and marginal produtivity of labor
would be equated aross the world.
I
There are winners and losers, but the winners an
potentially ompensate for the losers, if suh movement
o
urred.
I
In suh a ase, the global GDP ould more than double.
But, due to politial obstales, freer migration is often not
popular (See, Migration and development Eonomist May
6, 2004).
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
International Migration and Development (1)
I
::::::::::::
I
Migration of high-skilled labor (suh as aademis,
engineers and dotors) from poor ountries to rih
ountries has beome an issue.
I
The large investment in human apital made by a poor
ountry ould only benet rih ountries.
I
:::::::::::::
I
International labor migration an be good for the
development of the ountry, as remittanes to the poor
ould help lift a ountry out of poverty. (more on this later)
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
International Migration and Development (2)
I
Soial and politial remittanes
I
Migrants may bring home useful values and knowledge
I
Large-sale return migration has oinided with (and
perhaps boosted) politial and eonomi hange (e.g.,
Turkey, Greee and Portugal)
I
People of Indian origin in US and elsewhere are pushing for
transpareny and simpler regulations for foreign investors
who want to start businesses in India.
I
Soure of apital
I
Emigrants in rih ountries as a soure of apital (west
Afrian ountries).
I
Mathing funds for remittanes to pay for small ommunity
projets (entral Ameria).
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Remittanes (1)
I
Remittanes to developing ountries have soared from
$17.7 bn in 1980 to $30.6bn in 1990 to nearly $80 bn in
2002.
I
It has beome an important soure of foreign exhange
I
Double the amount of foreign aid and 10 times higher than
net private apital transfers
I
Remittanes are the most
::::::
soure of nanial ows
(not subjet to the onditions imposed by donors or the
herd behavior of investors).
HC Investment Health & In. Health Poliy Costs & Benets of Edu. Growth Child labor Disrimination Int. Migration
Remittanes (2)
I
Further, unlike foreign aid that goes through government
bureauraies, remittanes go diretly to households.
I
Who benets from remittanes? Depends on the ountry
(and its geography)
I
In Mexio and Central Ameria, remittanes largely go to
poor households.
I
In the Philippines, Vietnam and Pakistan, relatively
better-off families get the larger share.
I
Japan is the largest ountry soure of remittanes in East
Asia in 2001 (Balane of Payment Statistis, IMF(2002))
and one of the top ten ountries.
Referenes
Required reading
I
Kapur and MHale (2003).
I
Weil. Chapter 6.
I
Banerjee and Duo. Chapters 2-4.
I
Sikness or symptom? Eonomist Feb 7, 2004,
370(8361): 73. This provides some additional disussion
on hild labor.
I
Migration and development Eonomist May 6, 2004 (web
only). Available from
http://www.eonomist.om/node/2608019.
Referenes
Further reading
I
See Ehrenberg and R.S. (2008) for the disussion of the
theory of disrimination. It is on the ourse reserve.
I
Other relevant soures inlude Hanushek (1995),
Edmonds and Pavnik (2005), Kremer (1995),
Psaharopoulos (1994), Straus and Thomas (1998) and
World Bank (2001).
Referenes
Brown, K.H. (2003) `Diarrhea and malnutrition.' Journal of
Nutrition 133(1), 328S331S
Edmonds, E.V., and N. Pavnik (2005) `Child labor in the global
eonomy.' Journal of Eonomi Perspetives 19(1), 199220
Ehrenberg, R.G., and Smith R.S. (2008) Modern Labor
Eonomis: Theory and Appliation Tenth edition (Addison
Wesley). Read pp.281-292, and pp. 395-427. (Chapters 9-12
are generally useful)
Engle, P.L., M.M. Blak, J.R. Behrman, M. Cabral de Mello, P.J.
Gertler, L. Kapiriri, R. Martorell, M.E. Young, and the
International Child Development Steering Group (2007)
`Strategies to avoid the loss of developmental potential in
more than 200 million hildren in the developing world.'
Lanet 369, 229241
Fogel, R.W. (1997) `New nding on seular treands in nutrition
and mortality+ some impliations for population theory.' In
Handbook of Poluation and Family Eonomis: Vol. 1A., ed.
M.R. Rosenzweig and O. Stark (North Holland)
Referenes
Grantham-MGregor, S., Y.B. Cheung, S. Cueto, P. Glewwe,
L. Rihter, B Strupp, and the International Child Development
Steering Group (2007) `Developmental potential in the rst 5
years for hildren in developing ountries.' Lanet 369, 6070
Hanushek, E.A. (1995) `Interpreting reent researh on
shooling in developing ountries.'World Bank Researh
Observer 10(22), 227246. Available from
http://go.worldbank.org/Q0O0F7MOG1
Hekman, J.J., L.J. Lohner, and P.E. Todd (2003) `Fifty years
of miner earnings regressions.' Disussion Paper 775, IZA.
Available from
ftp://ftp.iza.org/RePE/Disussionpaper/dp775.pdf
Kapur, D., and J. MHale (2003) `Migration's new payoffs.'
Foreign Poliy 139, 4857
Klasen, S. (2000) `Low shooling for girls, slower growth for all?
ross-ountry evidene on the effet of gender inequality in
eduation on eonomi development.'World Bank Eonomi
Review 16(3), 345373
Referenes
Kremer, M.R. (1995) `Researh on shooling: What we know
and what we don't: A omment on hanushek.'World Bank
Researh Observer 10(2), 247254. Available from
http://go.worldbank.org/Q0O0F7MOG1
Psaharopoulos, G. (1994) `Returns to investment in eduation:
A global update.'World Development 22(9), 13251343
Ray, R. (2000) `Child labor, hild shooling, and their interation
with adult labor: Empirial evidene for peru and pakistan.'
World Bank Eonomi Review 14(2), 347367
Straus, J., and D. Thomas (1998) `Health, nutrition, and
eonomi development.' Journal of Eonomi Literature
36(2), 766817
Walker, S.P., T.D. Wahs, J.M. Gardner, B. Lozoff, Wasserman,
Pollitt G.A., J.A. E., Carter, and the International Child
Development Steering Group (2007) `Child development: risk
fators for adverse outomes in developing ountries.' Lanet
369, 145157
Referenes
World Bank (2001) Engendering Development: Through
Gender Equality in Rights, Resoures, and Voie (Oxford
University Press). Read pp. 1-29. Available from
http://go.worldbank.org/K22ADFICI0
HC InvestmentHC Investment
Health & Inc.Health & Inc.
Health PolicyHealth Policy
Costs & Benefits of Educ.Costs and Benefits of Educ.
GrowthGrowth
Child laborChild labor
DiscriminationDiscrimination
Int. MigrationInt. Migration
Appendix