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The relationship between economic growth and education has been 

one of the central threads of economic analysis. Both Adam Smith in 

the 18th century and Alfred Marshall in the 19th century, two important 

figures for the economics profession, addressed the question of how 

individual investments in “education” influence the wealth of nations. 

Throughout the 20th century, as Krueger and Lindahl (2001) point 

out in their survey of these issues, modern professional economists 

have been attempting to develop empirical estimates of the relationship between education and economic growth. Some of the most 

famous names in late 20th century economics made their reputations 

studying the question of individual returns to investment in education. The micro-economic literature looks at the relationship between different ways of measuring a person’s educational achievement and what they earn. Most studies show consistent results for what can be called the private or personal pay-off from education. For individuals 

this means that for every additional year of schooling they increase their earnings by about 10%. This is a very impressive rate of return.

b.The macro-economic literature examines the relationship between 

different measures of the aggregate level of educational attainment 

for a country as a whole and, in most cases, the standard measure 

of economic growth in terms of GDP. Once again, most studies find 

evidence of higher GDP growth in countries where the population has, on average, completed more years of schooling or attains 

higher scores on tests of cognitive achievement. However, as will be 

explained in somewhat greater detail below, given the diversity of 

national experiences, particularly over time, it is hard to settle on one 

figure for the rate of return at a social level