Journal Article

An economy at risk? The social costs of school inefficiency


Abstract: A preponderance of economic evidence demonstrates that the public school system in the United States is less efficient than it could be. However, few researchers have examined the economic consequences of such inefficiency. Lori Taylor finds that, although school inefficiency can crowd out consumption and investment in the remainder of the economy and can reduce the rate of return to investments in education, inefficiency has only a limited impact on economic activity. She estimates that, even compounded over twenty-five years, plausible degrees of school inefficiency reduce consumption and potential GDP by less than 1 percent. As such, the social costs of school inefficiency are similar in magnitude to the social costs of monopoly or the corporate income tax.

Keywords: Education;

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Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Economic and Financial Policy Review

Publication Date: 1994

Issue: Q III

Pages: 1-13