Answer to Question #82462 in Macroeconomics for lamanda

Question

How does opportunity cost to education contribute to low school enrollments in developing countries?

Answer 1

Altenative dependencies are, in 2 words, the alternative benefits from which you abstain.

Developing countries are characterized by inadequate economic growth and hence a low level of population welfare. In addition, in such an economy, the demand for unskilled labor for rough work prevails. Accordingly, if we compare on the one hand the amount of money spent and time spent on education and the level of earnings after receiving such education, and on the other hand, at the same time, gain valuable experience and professional skills in a particular job and eventually become a sought-after and well-paid specialist, then, with a higher probability, people will choose the second option.

A good example is the countries of Eastern Europe, where a builder, a truck driver and an industrial worker receive a salary almost 2 times higher than a teacher, doctor or a government worker. Moreover, given the high level of shadow economy, we can safely say that this gap is even greater.

Thus, proceeding from the position of rational economic behavior, why spend a limited time on studying unnecessary subjects and visiting educational institutions, if you can work as a collector of coffee, bananas or engage in antisocial activities in general and receive income from such activities. Agree in terms of low welfare, and even poverty, this position is justified.