Increase In Higher Education

There are a lot of people who want to study but can’t because of the costs. Higher education only gets more expensive. Education is not only beneficial for the people who have education but also to others. Therefore, it is a positive externality. Varian (2014) reached to the conclusion that positive externalities are most of the time under produced. A solution to that can be to subsidize higher education. But it also has downfalls. First of all, it looks like potential students in higher education don’t react to the price change. Secondly the enrollment should increase by around 50% before we can see a change. For that to happen there should first be an increase in professors before institutes can except so many students. The subsidies are

We can see this in the Netherlands, for example, the enrollment for higher education in the year 2016/2017 was 714 thousand and that is an improvement of 61.62% from 20 years before. There is still a lot more demand for higher educated people. This causes a growth in wage inequality. We can also see this from a study by Milken Institute (2002) that “the single factor with the greatest power to explain differences in per capita income between states is the percentage of college graduates.” Inequality causes less productivity, less growth and less efficacy. So the rich spend a smaller percentage of their income and people won’t want to work so hard if they feel like they are not being treated fairly. This is not the only negative effect of inequality in wage. Another effect is that the middle and the lower class will have to borrow a lot of money and that will add up to a point where they will have a hard time paying it back because the gap between wages will only become bigger. The rich will have the opposite, they will have more than enough savings, this can create bubbles. An example of a bubble is the 2008 crisis, they burst in time. Coincidental there are speculations that wage inequality is a cause for the 2008 crisis When there are a lot of people with higher education then the market for skill-complementary technologies will rise and people will work harder to improve the productivity of the workforce.

The government can help by given subsidize to people who study. Sadly, it doesn’t look like it always work. But even down it costs a lot of money and we don’t know if it works. You cannot ignore the benefits. It will make sure that the wage inequality will go down. That is a good thing because people will have to borrow less so there is going to be less risk that people cannot pay their debt back. Higher education doesn’t only have economic benefits but also social benefits. And it is not only good for the individual but also for society. The more people work the higher the tax revenue and that will add up to the consumer’s surplus. But we see that before we can do all this we need to have enough staff and not only improve the quantity but also the quality. There are a lot of things that need to be done but as long as people keep getting higher education there will be