Positive Externalities In Higher Education

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There are a lot of people who want to study but can’t because of the costs. Higher education only gets more expensive. Education is not only beneficial for the people who have education but also to others. Therefore, it is a positive externality. Varian (2014) reached to the conclusion that positive externalities are most of the time under produced. A solution to that can be to subsidize higher education. But it also has downfalls. First of all, it looks like potential students in higher education don’t react to the price change. Secondly the enrollment should increase by around 50% before we can see a change. For that to happen there should first be an increase in professors before institutes can except so many students. The subsidies are…show more content…
That means that it’s not only beneficial for the individual who consumes education but also for the public. Its more efficient that that the subsidies help an individual to get an education and with that get a better job. But maybe even more important to know is that it’s also beneficial for society because if the government spends billions of dollars on education it should not only be beneficial to a handful of people. And it’s not. Because the higher the people are educated, the lower unemployment, the higher tax revenues. Tax revenues are added to the consumer’s surplus. Less unemployment also means that there are less people who use unemployment benefits. It is also proven that higher educated people are more likely to volunteer, vote and donate. This is because you don’t only learn about the subjects you take you also learn how to learn and to change your way in different circumstances. In the world we live in it is extremely important to know how to adjust to the different economic developments. It is not only important for the individual but also for sociality…show more content…
The government can help by given subsidize to people who study. Sadly, it doesn’t look like it always work. But even down it costs a lot of money and we don’t know if it works. You cannot ignore the benefits. It will make sure that the wage inequality will go down. That is a good thing because people will have to borrow less so there is going to be less risk that people cannot pay their debt back. Higher education doesn’t only have economic benefits but also social benefits. And it is not only good for the individual but also for society. The more people work the higher the tax revenue and that will add up to the consumer’s surplus. But we see that before we can do all this we need to have enough staff and not only improve the quantity but also the quality. There are a lot of things that need to be done but as long as people keep getting higher education there will be
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