Human Capital Theory and Education

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ECONOMICS
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Seminar Sheet 6: Human Capital Theory and Education................................................................11. Analysing the decision-making approaches of an individual in terms of financial costs andbenefits presented in diagram.................................................................................................12. Signalling role of education................................................................................................3Empirically-Oriented question.........................................................................................................41. a) Calculating gross rate of return......................................................................................4b) Analysing the variation in the rate of return for the employees performing in two differentgroups.....................................................................................................................................52. a) Determining the reason behind inaccurate outcomes through data base........................5B) Ascertaining the reason regarding higher employment rates............................................5Policy Related Questions:................................................................................................................6Human capital and Signalling explanations...........................................................................6Recent changes in financing higher education in UK............................................................6Seminar sheet 8: Labour market inequalities...................................................................................71. Analysing impacts of skilled biased technology affects labour market of unskilled workerswith reference to demand and supply curve...........................................................................72. Identifying the impacts of increased international competition in manufacturing sectoraffects labour market for unskilled employees.......................................................................9Empirically-Oriented questions.....................................................................................................101. Calculation of measure of inequality among two reasons................................................10Q.2Consistent measure for level of inequality....................................................................10Q.3 Calculation of level of inequality..................................................................................10Policy-Focused Questions..............................................................................................................111. Policies which introduced by government to reduce level of wage of inequality............112. Explanation on reason behind policies which may not be popular or achievable frompolitical perspective..............................................................................................................15CONCLUSION..............................................................................................................................19REFERENCES..............................................................................................................................20
INTRODUCTIONIn an economic scenario there are various factors and elements which are required to beconsidered by government before planning and decision making. It includes strategies formonetary system, employment, domestic production and relevant factors which affects nationalgrowth. In the present report, there will be discussion based on UK’s labour market withreference to various statistical data base and relevant outcomes. Report will analyse changesincurred in labour market as well as predict future growth for the same. Along with this, therewill be measurement on information with influences of statistical tools such as mean, mode,median, quartile, percentile etc. to have accurate analysis over economic conditions in nation.Seminar Sheet 6: Human Capital Theory and Education1. Analysing the decision-making approaches of an individual in terms of financial costs andbenefits presented in diagramEducation is considered as most effective tool for development of individual and fordeveloping economy of country. For development of country, it is necessary that people ofcountry will earn good. There are some students who are benefited with high quality education atsecondary level but did not enroll in college, did not invest for their education. Government havedeveloped multiple strategies so that individuals who are capable will complete their highereducation and will make efforts to bright their future. Federal student aid policy is one amongthem Therefore, more development of education among people of country, government hasdeveloped federal set of policy in which loan with less interest rate is provided to students whowants to complete their education.Private rate of Return: It is similar to discount rate which equalise the real cost spend oneducation during graduation time and analyse the real gains after completion of the education. Itconsiders, costs belong to tuition, foregone earnings, gains through net taxes in employment aswell as various resources through which a student can have funds for education. There will beinfluences of loans and grants which were being used in education that can be treated costsimplicated by them in education(Forder and et.al., 2018). However, to articulate decisionmaking of an individual there will be analysis over financial cost as well as gains as per belowlisted graph.Social rate of return: This is the rate which determines that the costs and gains to thesocial environment which reference to make investment in education. There has been influences1
of opportunity cost on the basis of people which are participating the production activities(Crépon and et.al., 2018). It consists of the benefits to society with reference to raise in theproductivity.Interpretation: On the basis of above listed pictorial presentation of the higher educationspending of the individual as well as long term benefits associated through them. There has beenrequirement of less time and costs in the graduation of an individual. Thus, 3-4 years ofeducation will help a person in earning higher benefits for the longer period of time. Thus, thecosts which were being spend in education is comparatively less investment than the higher gainsstated in the future. Gains can be differentiated on the basis of education acquired by anindividual such as secondary school leavers will have less returns than the University graduates.now there are more than four out of five direct loan students which means nearly 3 millionrecipients are there who take direct loan to invest in their education. Its overall benefits is that to2
develop the career, workers which have bachelor degree are earning nearly 1 million incomparison to workers who are just diploma holder.2. Signalling role of educationIn accordance with the signalling theory, there have been ascertainment of the data base ineach period with context to a graphical presentation. In accordance with the shift in the graph atupwards of downward direction. In respect with considering the Job market on which potentialemployees sells their services in against wages and prices(Maesse, 2018). Therefore, raise inemployment rate will be challenging for employers in terms of making payment of higher costswhile on the other side, reduction in employment rate will be challenging to society.In respect with the signalling model of education that states that, an individual paydifferentiated amount for the level of education. Thus, high cost education brings the lessproductive efforts from workers. Similarly, low cost education brings highly productiveemployees(Aragón, Rud and Toews, 2018). Moreover, people spend much on education brings3
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