US Education Policy as Economic Policy

Abstract

The idea that education contributes to economic growth is by no means new. The value of skills and knowledge to economic performance was abundantly clear to Adam Smith¹ (1723–1790) as early as the eighteenth century and to William Petty (1623–1687) as early as the seventeenth century. It was not until the 1960s, however, that modern economists began to systematically incorporate the idea of learning and education into economic theory. Evolving out of the work of Mincer (1958), Becker (1964), and Schultz (1961, 1964, 1971), human capital theory (HCT) proposed that capitalist organizations could enhance worker performance and improve productivity by investing in skills and training. Economists began using the metaphor of “capital” (a long-standing concept in economics) to explain the role of education and training in advancing economic performance.