Economics of Education


The objective of this course is to apply economic concepts and tools to the analysis of current issues of Education Policy. The course combines economic theory (at micro and macro level) with some econometrics and institutional literature to address education problems. Besides the theoretical and empirical analysis of the questions involved a particular attention will be devoted to policy issues. The emphasis of the course is on primary and secondary levels of education.

General characterization





Responsible teacher

Ana Maria S. Balcão Reis Peão da Costa


Weekly - Available soon

Total - Available soon

Teaching language




Main references:
Machin, S. and Anna Vignoles (eds), What’s the Good of Education?, Princeton University Press, 2005
Daniele Checchi, The Economics of Education, Cambridge University Press, 2006
Johnes and Johnes (eds), International Handbook of Economics of Education, Edward Elgar Publishing Ltd, 2004
General Reference:
Hanushek, Machin and Woessman (eds), Handbook on the Economics of Education, vol. 3, North-Holland, 2011

Teaching method

There are two classes a week, of 1h20m. These are mostly lectures but also include students’ presentations. Slides used in class are posted on Moodle. Students are expected to look at these before class.

Evaluation method

Grading will take into account the following elements:

1.    Individual answers to 2 quizzes (15 to 20 minutes each). These quizzes will be solved in class (dates: tbd). Weight on the final score: 15%
2.    A poster, to be done by groups of 3 or 4 students, presenting the educational systems of different countries. Further details on Moodle.
Delivery date: tbd    Weight on the final score: 10%

3.    Oral Presentation of a paper: (15 to 20 minutes) to be done in groups of 3 or 4 students. Papers to be presented are to be chosen by the students from a list made available in Moodle. Also, each group will comment the presentation of another group.
Oral presentation (and PPT): 15%; Comments: 5%.

4.    Final exam (date: tbd) — contributes to the final grade with a weight of 55%. The minimum grade is 8.

The groups for assignments 2 and 3 have to include students from at least 2 nationalities.

Subject matter

0.    Introduction: the relevance of education.
?    What´s the good of education?, Ch.1
?    Checchi, Ch 1

1.    Demand for education: the economic decision to invest on education, human capital theory, credit constraints, education as a signal
?    Checchi, Ch 2 and 3 (Section 1)
?    International Handbook on the Economics of Education, Ch. 2
?    Extra: Gary Becker Nobel Prize Lecture, “The Economic Way of Looking at Behavior” Journal of Political Economy, 1993
2.    Returns to education; Methodological issues on the estimation of returns on education
?    What´s the good of education?, Ch.7
?    Checchi, Ch 6.6 and 6.7
?    International Handbook on the Economics of Education, Ch. 1

3.    The educational production function:
i)    the relevance of early childhood education
ii)    the efficiency of increased resources applied in education
iii)    the relevance of class size and peer effects for success,
iv)    the impact of teachers on educational outcomes.
?    Checchi, Ch 4
?    Todd, Petra E., and Kenneth I. Wolpin. "On the specification and estimation of the production function for cognitive achievement." The Economic Journal 113.485 (2003): F3-F33.
?    Duflo, Esther, Pascaline Dupas, and Michael Kremer. "Peer effects, teacher incentives, and the impact of tracking: Evidence from a randomized evaluation in Kenya." The American Economic Review 101.5 (2011).
?    International Handbook on the Economics of Education, Ch. 9
?    Hanushek, Eric A., & Ludger Woessmann, The Economics of International Differences in Educational Achievement in HANDBOOK OF THE ECONOMICS OF EDUCATION, VOL. 3, CHAPTER 2 (MAINLY SECT. 4 )

4.    Education financing: the relative efficiency and equity of the options between private and public systems (vouchers, subsidies, loans).
?    Checchi, Ch 5
?    International Handbook on the Economics of Education, Ch. 7