Economics of Education
This course explores why individuals and societies invest in education. Education has many private benefits (earnings, employment, health and longevity, consumption value), as well as social benefits (GDP growth, tax income, positive externalities). Education also affects inequality within a generation and across generations. Throughout this course, current policy issues concerning education will be discussed. Economic models will be connected to data that can be used to test the models' implications, and students will learn how models and data can serve to inform education policy. Applications will address primary and secondary education, university education, and vocational or on-the-job training, and place the Danish and European experience in an international context.
First, we introduce human capital theory to study individual decision-making. It will be used to analyze investments in education and how they are affected by ability, comparative advantage, family background, and macroeconomic conditions. We will encounter the empirical problem of disentangling the return to education from the return to innate ability, and investigate how the association between education and individual earnings has changed over time.
At the societal level, we study the social return to education and the financing of publicly provided schooling. Looking at the production of education, we ask how educational outcomes are produced by schools, whether financial resources improve student achievement, and which school inputs are more or less effective in producing desired educational outcomes (such as PISA test scores). We will consider the potential of early childhood education in the context of skill-formation over the life cycle. We will also reflect on possible conflicts between societal goals - efficiency, equity, and liberty - that influence decisions about the allocation of education resources.
From a macro perspective, education matters for national economic growth as well as for individual mobility. We investigate whether there is a risk of over-education, or whether individuals under-invest in light of a rapidly changing economic reality and international competition. We also study the intergenerational transmission of economic status through parental investments, credit constraints and achievement inequality, and the resulting income distribution.
This course will teach students how to apply economic thinking to education-related questions. In doing so, the class will draw on a wide range of economic principles and apply previously learned material. The variety of models and perspectives will range from macro to micro, including labor economics, macroeconomic growth, and public finance. Students will be equipped with an economic toolbox to evaluate education policy issues methodically, and should eventually be able to use these tools to inform education policy. While the course will be based on theory, it is nevertheless of an empirical nature: recent data will be used to evaluate current issues, and students will learn how to read empirical articles that form the state-of-the art in economics of education.
After completing the course the student is expected to be able to:
- Account for economic models in the education context,
- Identify determinants of equilibrium/optimality and describe the role they play relative to each other.
- Recall the frameworks and their assumptions, as well as their economic predictions.
- Discuss the empirical state-of-the-discipline
- Read selected articles in economic journals and extract the appropriate conclusions.
- Examine whether the presented empirical evidence convincingly identifies causal relationships. Later, evidence needs to be recalled to address topics.
- Identify key questions in a brief non-specific text, presented as a policy issue rather than an economic model and link the key questions to economics of education.
- Select the theories and pieces of empirical evidence which are relevant for the question or debate.
- Choose the correct theory or framework that helps them organize an argument around a given education issue (manage the topics).
- Evaluate the real-life relevance of possible economic explanations or scenarios
- Assess which explanation or hypothetical outcome is more or less likely. This means they have to navigate the sometimes contradicting models or papers that we have studied and present their trade-offs critically.
- Apply the learned knowledge and skills to new and complex policy cases.
- Present economic scientific arguments, orally and in written form, which are based on their reading of theory as well as state-of-the-art empirical findings.
- Construct concise cases where they show their well-rounded appraisal of a situation that connects economic theory to the real world.
- Evaluate policy proposals critically and scientifically, and present arguments in favor or against them.
Lectures are not only frontal teaching, but involve discussions
between students and the instructor.
Active participation is expected during the lectures, as well as the exercise classes which include peer-feedback on assignments.
With some topics, we will practice the argumentation skills in a panel-discussion, where prepared content is debated and the strengths of different arguments evaluated.
Mandatory individual assignments prepare technical material and practice the exam form (written evaluation of policy-relevant education issues, demonstrating ability to draw on appropriate economic theories).
Restrictions due to pandemic crisis:
The teaching in this course may be changed to be taught either fully or partly online due to a pandemic crisis like COVID-19. In case of changes and further information, please read the study messages in KUnet or the announcements in the course room on Absalon (for enrolled students).
Main textbook: Checchi, D. (2006) The Economics of Education, Cambridge University Press (all chapters). ISBN: 9780521066464, http://dx.doi.org/10.1017/CBO9780511492280
In addition to the following examples of journal articles, lecture notes (slides) are considered study material and are part of the syllabus.
Examples of further mandatory reading:
- Becker, G. S. and N. Tomes (1986). Human Capital and the Rise and Fall of Families. Journal of Labor Economics 4 (3), 1-47.
- Becker, G. S. (1991) Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. National Bureau of Economic Research, distributed by Columbia University Press. Chapter 4 and its Appendix.
- Belley, P. and L. J. Lochner (2007). The Changing Role of Family Income and Ability in Determining Educational Achievement. Journal of Human Capital 1 (1), 37-89.
- Cunha, F. and J. J. Heckman (2007). The Technology of Skill Formation. The American Economic Review: Papers and Proceedings 97 (2), 31-47.
- Psacharopoulos, G. and H. A. Patrinos (2004). Returns to Investment in Education: A Further Update. Education Economics 12 (2), 111-134.
- Solon, G. (2002). Cross-Country Differences in Intergenerational Earnings Mobility. The Journal of Economic Perspectives 16 (3), 59-66.
- Hanushek, E. A. and L. Woessmann (2010). Education and Economic Growth. In D. J. Brewer and P. J. McEwan (Eds.), Economics of Education, Volume 2, pp. 60-67.Amsterdam: Elsevier.
- Lleras-Muney, A. (2005). The Relationship Between Education and Adult Mortality in the United States. Review of Economic Studies 72 (1), 189-221.
- Lochner, L. J. and E. Moretti (2004). The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports. The American Economic Review 94 (1), 155-189.
It is strongly recommended to have finished the first year of
the Study of Economics at the Department of Economics, Copenhagen
It is recommended to have finished the 3rd semester, specially the courses "Probability theory and statistics" and Microeconomics I.
The student will benefit from having taken Econometrics I (at the 4th semester).
The course material has two components: Economic theory as it relates to education, and the application of this theory to real-life issues, using empirical methods.
In the first couple of weeks of the course, therefore, we study human capital theory and students are expected to be able to follow the derivations of these models themselves. This requires knowledge of constrained optimization techniques. They will be practiced in the exercise classes.
Then, building on this foundation, we study empirical papers and discuss the benefits/disadvantages of different approaches to using available data to evaluate questions such as the returns to education. While students will not be working with data themselves in this course, a basis in econometrics is needed to a) understand issues such as causality, and b) interpret the estimation results presented in the scientific papers.
2 hours lectures 1 to 2 times a week from week 6 to 20.
2 hours exercise classes a week from week 6/7 to 20/21.
Timetable and venue:
To see the time and location of lectures and exercise classes please press the link/links under "Timetable"/"Se skema" at the right side of this page (F means Spring). The lectures is shown in each link.
You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-F22; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Forår/Spring – Week 5-30”
Press: “ View Timetable”
Please be aware:
- The study administration allocates the students to the exercise classes according to the principles stated in the KUnet.
- The exercise class will be taught in English.
- The schedule of the lectures and the exercise classes can be changed without the participants´ acceptance. If this happens you can see the new schedule in your personal timetable at KUnet, in the app myUCPH and through the links in the right side and the link above.
- It is the students´s own responsibility continuously throughout the study to stay informed about their study, their teaching, their schedule, their exams etc. through the curriculum of the study programme, the study pages at KUnet, student messages, the course description, the Digital Exam portal, Absalon, the personal schema at KUnet and myUCPH app etc.
During lectures, students participate in discussions to test their skills at integrating theory and empirics, and evaluating empirical evidence critically. The lecturer will provide ongoing individual and collective feedback during lectures and the panel discussions. The teaching assistants gives the students individual feedback on their mandatory assignments. Additionally, the lecturer gives collective feedback in the mock-exam assignment.
Foreign students and guests: Information about admission requirements, application, tuition fee, registration at Study Economics.
Please read the curriculum before enrolment.
Gæste- og enkelfagsstuderende: Tilmelding via Uddannelse i Økonomi.
- 7,5 ECTS
- Type of assessment
Written examination, 3 hours under invigilationas an ITX-exam in the exam venues of the university.
The exam assignment is in English and must be answered in English.
Changes due to Coronavirus:
In the event that COVID-19 restrictions may affect the conduction of the ITX-exams, the written exam and the re-sit exam will be changed to a 3 hours take-home exam with all aids. If done so, the changes will be announced in study messages at KUnet and in the Digital Exam portal.
The take-home exam is an individual exam and it is not allowed to communicate with any one about the exam assignment nor the solution at all. It is also prohibited to distribute data and other information at all. If this or alike actions happens, it will be regarded as cheating and plagiarism.
No aids allowed at the written ITX-exam.
If the ITX-exam is changed to a take-home exam due to COVID-19, the written take-home exam will be with all aids.
Information about allowed aids for the re-examination, please go to the section "Re-exam".
- Marking scale
- 7-point grading scale
- Censorship form
- No external censorship
at the written exam.
The written ITX-exam may be chosen for external assessment by random sample.
An oral re-examination may be with external assessment.
Criteria for exam assessment
Students are assessed on the extent to which they master the learning outcome for the course.
In order to obtain the top grade “12”, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.
In order to obtain the passing grade “02”, the student must in a satisfactory way be able to demonstrate a minimal acceptable level of the knowledge, skills and competencies listed in the learning outcomes.
As a very basic requirement for passing the course, students must demonstrate sufficient understanding of the human capital models, correctly recall their goals, assumptions, and predictions (knowledge of theory), and recall the purpose, econometric approach, and findings of empirical papers we read (knowledge of empirics).
In order to pass, students must also demonstrate the skill of linking their passive knowledge of models and empirical papers to a given (hypothetical) real-world situation. This means they must be able to select the models or papers that are appropriate and relevant to the case at hand, and then evaluate their different predictions or arguments, and for example point to the instances where a model's assumption diverges from a real-life scenario (skill).
In order to receive full credit, students must demonstrate a well-developed competency to construct arguments on complex education issues that utilize the best available resources from economics of education – be they theoretical or empirical.
Single subject courses (day)
- Class Instruction
- Course number
- 7,5 ECTS
- Programme level
- Full Degree Master
BachelorFull Degree Master choice
- Go to 'Signup' for
information about registration and enrollment.
Information about admission and tuition fee: Master and Exchange Programme, credit students and guest students (Open University)
- For teaching: Go to 'Remarks'.
- For exam and re-sits: Go to 'Exam'.
- Department of Economics, Study Council
- Department of Economics
- Faculty of Social Sciences
- Sonja Settele (13-5f7b7a766d3a5f7180807178714c716f7b7a3a77813a7077)
- Sarah Zaccagni (14-606e7f6e753b676e70706e747b764d72707c7b3b78823b7178)
Lectures: See ‘Course Coordinators’
Teacher of the exercise class:
Ex. Class 1: Louis Alexandre Renè Freget
Please read "Remarks" regarding the schedule of the teaching.
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