Chapter 17: The Economics of Education

Nonmonetary compensation

things like employer- paid retirement benefits, health insurance, life insurance, and long· term disability insurance.

Human capital

is the acquired skills and knowledge that make you more productive.

As educational attainment expands, the positive externality from education becomes

smaller because the reduction in crime and increases in social stability are greater for completing lower levels of education than for completing higher levels of education.

The direct costs of education include

tuition, fees, books, supplies, and other items necessary to attend school.

Proposals for education reform include

school choice programs, raising teachers' pay, and instituting merit-based rather than seniority-based pay systems.