Education and Economy

Abstract

The relation between education and economy is interdependent and reciprocal. Education is a form of human capital, an intangible form of accumulated capital stock, which includes level and dispersion of education as well as those of applied and basic research. It has many measurable forms, including years of aggregate schooling, rates of enrollment, public education expenditures, and levels, types, and use of on‐the‐job training programs. Economic activity is understood as economic growth, usually measured as changes in the size or rate of gross or per capita gross domestic output, and determinant of how much improvement will occur in a society's standard of living. Unlike business cycles, which reflect short‐term (< 10 years) aggregate fluctuations in output, incomes, and employment, economic growth is a long‐term concept, depending on past investments in physical capital like industrial plants and machinery, human capital, and the pace of technological innovation.