The relationship between earnings and education has been the focus of much debate in labor economics. Trillions of dollars and a huge chunk of the overall economy is spent on education. How can we quantify the benefits of this education we spend so much on? Most of the benefits we seek from education are economic in nature as more schooling signals a certain level of training and ability. Higher education means higher income and higher productivity. However, there is surprisingly little conviction about how much education contributes to the nation's overall wealth. Economists have tried and come up with some illuminating numbers. Alan B. Krueger, an economics professor at Princeton, says the evidence indicates that, up to a point, one more year of schooling is likely to increase an individual's income about 10 percent. Of course, it is not true for all people and it varies by individual.Two Harvard economists, Lawrence F. Katz and Claudia Goldin, studied the effect of increases in educational accomplishment in the United States labor force from 1915 to 1999. They approximated that those increases directly resulted in at least 23 percent of the overall growth in productivity, or around 10 percent of growth in gross domestic product. If economists are right, education is not just part of the cost of continuing a functioning democracy, but an avenue of wealth creation for everyone. That means that investing in the education of every American is in everyone's self-interest.
http://www.nytimes.com/2005/12/11/business/yourmoney/11view.html
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