Investing in education

In highly developed societies, education is given a very prominent role in the process of maintaining and increasing the level of development. The fact that decisions with regard to education, both at the level of individuals and of society, mainly have the nature of investments, does not mean that they are the result of simple return-on-investment calculations, as was stated in neoclassical investment theories. In the past, two approaches were developed to indicate the effects of investments in education on the labour market. The first approach concerns the rate of return. The second approach that was developed, concerns the manpower requirement approach. The most important difference between the rate-of-return approach and the manpower requirement approach therefore does not concern the theoretical assumptions that constitute the basis of the way in which the labour market functions. The chapter also presents an overview of the key concepts discussed in this book.