Educational Externalities-Eco405

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Educational Externalities
In economics, an externality, or transaction spill over is a cost or benefit that is not transmitted through prices. This spillover to others is called a positive externality in consumption, since people other than the direct consumer of the item find their well-being enhanced by the direct consumer’s use of it. Education is a good example of a positive externality to acquire educational benefits to the individual and to society as a whole. These are the possible positive externalities such as more the following: 1- Rapid economic growth 2- Better functioning democratic processes 3- Improve public safety, hygiene, and greater charitable giving as the average years of education increases.
Firstly, the positive externality associate with education is rapid economic growth. From this perspective, education increases not only productivity of the person being educated but also the productivity of his co-works. The highly skilled workforce permits entirely different kinds of technologies to be introduced or to be introduced earlier in a development cycle. Therefore, this expanded education of an individual may indeed affect other workers in the economy. Then, it is obvious that the improved abilities of the best students lead to more rapid invention and development of new technologies. These spillover benefits of education create a justification for government intervention to compensate for generating external benefits.
Secondly, the government involvement in education ensures that every child receives the minimum amount of education is to promote a stable and democratic society. It is impossible to build a stable and democratic society without a minimum degree of literacy and knowledge and without spread acceptance of some common set of values. Education can contribute to both and the gain from the education of a child accrues not…...

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