9 Economic Theories of Education

While the human capital theory builds the framework of the economics of education, there is also progress in other theoretical areas. The book of Gradstein, Justman und Meier (2004) comprises a comprehensive framework of the political economy of education and explains many important topics in the financing of education. Falck and Rattsø (1997) examine public-economic determinants of educational expenditures of federal states, and Nerlove, Razin, Sadka and von Weizsäcker (1993) derive the effects of a fiscal policy on the acquisition of human capital theoretically.

Hartog (2001), Bishop and Woessmann (2004) and Brunello and Ishikawa (1999) provide general examples of positive and normative theories of education. Hartog (2001) presents a theoretical model for the understanding of empirical results on human capital and individual skills. Bishop and Woessmann (2004) describe the effects of institutional characteristics of educational systems on educational outcomes within a simple education production model. Brunello and Ishikawa (1999) model the effects of the size of an elitist school sector on investments in academic qualification, average productivity and earnings.
Despite the fact that the network mainly consists of empirical researchers, some of the economists also work on theoretical models. Our excellent advisors from Turkey and Romania analyze the negotiations of tuition fees between universities and potential students (Epple, Romano, Sieg and Sarpça 2006) and model educational and residential decisions under the choice of different schools (Hanushek, Sarpça and Yilmaz 2007).
Hanushek, Leung and Yilmaz (2003) compare the theoretical framework of different distributional mechanism (inter alia educational subsidies) and their effects on the distribution of income. In volume 3 and 4 of the Handbook of the Economics of Education, Glomm, Ravikumar and Schiopu (2010) give theoretical insights into the political economy of educational finance.



9a Political economy and public economics of education
9b Positive and normative theories of education