Human Capital Theory in Educational Imbalance

Educational Imbalance is discussed by putting to light the significance of education as a factor of economic development. To do so, several hypotheses should be considered. Studies prove that education's overall positive effect on the development of the economy is greatly decreased because of imbalance in the tertiary education. The social returns of the lower educational levels is reduced by economic inequality and repression of political rights.

• Educated labour Force – When we discuss educational imbalance, we can start with theories. Human capital theory elaborates that, rather than considered merely as a consumable good, education is an investment in future skills. Since the author Lucas released a seminal article in 1988, education has been considered as one of the main factors in generating endogenous growth in developing long-term growth models. The economic principle behind this proposition is that economies with labour forces which are better educated has the more potential to using in better ways the material elements of production and relevant technical knowledge.

• Critics – In discussing educational imbalance , we also talk about the criticism against the human capital approach. The human capital approach in education as a factor in labour force and economic development, however, is claimed to have unsound theoretical foundations according to its critics, among whom is Klees in 1991. According to them, the human capital theory's basic assumption that education raises productivity is just taken as given; that the proof is argued to be in the domain of sciences other than economics if it is to be discussed. Thus, economists often attribute the accumulation of human capital as a linear function of time devoted to education because of this claimed lack of deeper insights. The specification can be misleading because there may be different results of education at different ages, different levels of education and other structural breaks according to Helberger in 1988. Hence, the critical questions are how does education alter individuals and what effects it has overall.