One of the main reasons for having a mandatory state school system is that by gaining knowledge and skills (‘human capital’) through schooling it allows individuals, and by extension, society, to produce goods and services more efficiently. This enables economies to grow and the people living within them to become wealthier. In this sense, schools can be seen as institutions that create human capital. This makes them crucial for economic wellbeing and growth.
You may not have considered it but many economists view schools as being similar to the classic ‘firm’. Where firms use inputs such as machinery, workers and raw materials to produce economic output, schools use the inputs of children, teachers and books to produce outputs in the form of educated and skilled individuals. Similar to the analysis of the firm where the objective is to maximise profit, schools can also be characterised as having the objective of maximising their outputs, given constraints in their inputs such as funding.
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