Question

How does an increase in the amount of education affect an economy's productivity and income? Please explain extensively. Thank you

Answer 1

Education has a positive impact on the overall economic growth of the nation. It is a positive externality and is considered to be a merit good. It is important not only for individual self growth but for the benefit for the overall society. Government of various nations, therefore subsidize education mainly at the primary and secondary so that more and more children get proper education. It is considered to be an investment in human resource development and any investment in human resource development of a nation increases an economy's productivity.This increases total output produced by the nation and thus overall income of the nation rises. Most of the governments are also subsidizing higher education these days to improve their overall productivity. Thus, increase in the amount of education increases an economy's productivity and income.