innovation policy should go hand in hand. In other words, it is not so much that

education has driven economic growth significantly more than technological

change, trade globalization, or other factors. Rather, the combination of

schooling and other major economic transformations has been the key to reducing

extreme poverty.

 

Beyond basic education

 

International institutions and governments have put universal basic education at

the center of the policy agenda for poverty reduction for two reasons. First,

there is a general perception that returns to human capital are decreasing, with

basic education generating the highest gains.

 

Second, improving access to basic education disproportionately benefits

low-income households, especially in less-developed economies where access to

higher education is restricted to an elite few.

 

In many countries, however, both assertions may turn out to be wrong. My

research suggests that, contrary to conventional wisdom, returns per year of

schooling in terms of a person’s income are not greater at lower levels of

education. In India, for example, a year of primary education will increase a

person’s earnings by 2–3 percent; a year of secondary education, by 6–8 percent

over the earnings of someone with only primary education; and a year of

postsecondary education, by more than 13 percent over those of a person with

secondary education alone.