Toward a Model of Education and Labor Markets in Labor Surplus Economies
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[Excerpt] This model is intended to describe the essential relationships between the demand for and supply of education and the demand for and supply of educated workers. The terms "education" and "training" will be used interchangeably throughout, since the proposed model is a general one designed to apply both to traditional education and to specialized training for such occupations as agricultural and veterinary workers, teachers, the skilled trades, and the like. The terms "educated," "trained," and "skilled" will also be used synonymously. If the model is to be meaningful, it must possess two basic characteristics. First, it must be consistent with the historical facts of labor surplus economies. Second, it must suggest qualitative, and hopefully quantitative, factors to be considered by policy-makers in formulating educational and labor market policies consistent with national objectives. Work of this nature must progress through three definite phases. First is the formulation of the model. Next comes the solution of the model, which is used to describe the historical time paths of interesting magnitudes and to suggest optimal paths for the control variables for planning purposes. Finally, as much empirical evidence as possible is needed to make the study operationally meaningful for planners. I am here concerned only with phase one: a statement of the model. I hope to formulate the basic relationships, including the essential institutional facts of life. As will become evident, such an exercise leads to a conceptually straightforward but mathematically complex model. An analytical solution may prove to be impossible. Perhaps computer simulations of the basic relationships are all that can be found. In any event, a clear statement of the model is a prerequisite for further study.