MASINDE MULIRO UNIVERSITY

of
SCIENCE AND TECHNOLOGY

FACULTY OF EDUCATION AND SOCIAL SCIENCES

DEPARTMENT OF EDUCATIONAL PLANNING AND MANAGEMENT

BACHELOR OF EDUCATION
COURSE CODE: EPM 412
COURSE TITLE: ECONOMICS OF EDUCATION AND EDUCATION PLANNING

COURSE OUTLINE 2019/2020

UNITS: 3 UNIT COURSE
Purpose;
▪ To introduce education students to basic economic concepts and how they relate to education
with reference to both developed and developing countries.
▪ Introduce students to the planning concepts, methodologies and problems of educational
planning in developing countries with illustration from the Kenyan situation.
Sessions
a) The course will take one semester 16 weeks.
b) Modes of teaching
i. Lectures
ii. Practical projects
iii. Tutorials
Evaluation
(i) Continuous assessments - a total of 15%
(ii) Practical project/tutorials - a total of 15%
(iii) Final course examination - 70%

COURSE TOPICS

1) Introduction to Economics of Education

a) Definition of concepts
b) Economics of education content
c) Significance of Economics of Education

2) Human Capital theory

a) Concept of Human Capital.
b) Human capital theory.
c) The link between education and earnings
d) Application of human capital theory to investment in education

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3) Demand and supply of education
a) The concepts of Demand
b) Demand for education: Types and factors
c) Supply of education: Types and factors
4) Costs in Education
a) The concept of Cost in education
b) Classification of costs of education
c) Determinants of cost of education
d) Economies and diseconomies of Scale
e) Enhancing economies of scale in education institutions

5) Financing of Education in Kenya

a) The concept of financing education
b) Sources of funds in financing (Public, private and Development partners)
c) Modes of financing education: Description, advantages and disadvantages

6) Education as a consumption and investment commodity

a) Concept of consumption and investment in education
b) Benefits accruing from investment in education
c) Link between Education and earnings
7) Education and Socio-Economic Development
a) Concept of economic growth and development
b) Link between education and income distribution
c) Education and socio-economic development
8) Education planning
a) Definition of concept; planning, educational planning
b) Reasons for and functions of planning
c) Features of a good education plan
d) Education planning process
e) Challenges of educational planning in developing countries
9) Approaches in Educational planning
a) Social demand approach
b) Manpower requirement approach
c) Cost Benefit Analysis

10) Access, Efficiency and Equity in Education

a) Definition of concepts; access, equity, efficiency
b) Indicators of access
c) The concept of equity in education
d) Causes of inequality
e) Indicators of equity in education (gender parity, genie co-efficient etc)
f) Internal and External Efficiency
g) Measures of internal efficiency (Progression, repetition, dropout and transition)
h) Ways of enhancing efficiency

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REFERENCES
Ayot,H,O and Briggs,H(1992)Economics of Education Research.Pulications lts
Atinkinson, G.B.J (1983) Economics of Education. Hodder and Stoughton.London.
Gravenir, F.Q, Ayodo, T.M.O and Gatimu,K(1990)Economic of Education. University of
Nairobi Press, Nairobi
Carnoy,M. and Thias,H(1972) Cost Benefit Analysis of education in Kenya. World Bank
washington,D.C
UNESCO (1968) Reading in Economics of Education.UNESCO, Paris.
Knight,J.B and Sabot,R.H (1990)Education,productivity and Inequality.World Bank,
Washington,D.C.
Psacharopoulos ,G and Woodhall,M (1985)Education for Development;An Analysis of
Investment choices.Oxford University press,Washington,D.C.
Killick,T.(ed) (1980) Papers on the Kenya Economy;Performamce,problems and
policies.Heineman Education,Boos.Nairobi.
Blaug, M .(1974)Education and the Unemployment problems in Developing
countries,ILO.Geneva.
Cheswas,J.D (1969)Methodologies of Educational Planning for Developing
countries,UNESCO-11EP,paris.
Coombs,P.(1969) What is Educational planning?UNESCO,11Ep,Paris.
Mutua,R.W and Namaswa,G.(1992) Educational Research
Publication
Count,D and Ghai,D(1974)Education,society and Development.Oxford University press.
Nairobi
Beeby,C.E.(1969)Planning and the Educational Administrators, UNESCO, 11Ep,Paris
UNESCO (1974) Trends and projections of Educational Enrolment in the less developing
Countries. UNESCO, 11Ep,Paris
Ta Ngoc Chau (1969) Demographic Aspect of Educational Planning. UNESCO-
11EP, Paris.
Kendall,W.L.(1968)Statistics of Education in Developing Countries; An Introduction to
their collection and presentation, UNESCO,paris.

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EPM412: ECONOMICS OF EDUCATION AND EDUCATIONAL PLANNING
INTRODUCTION TO ECONOMICS OF EDUCATION
Definition of Concepts:
a) Economics
Is a social science which studies the allocation of scarce resources that have potential alternative
uses among the competing and virtually limitless wants of consumers in the society.
b) Economics of Education
It is the study of economic issues relating to education. They include the demand for education,
financing and provision of education and the education production functions. Education economists
analyze both what determines or creates education, and the impact education has on individuals and
the societies and economies in which they live.
Major Issues in Economics of Education
i) How much should a country spend on education?
ii) How should the expenditure be financed?
iii) Is education mainly an investment or consumption?
iv) If it is an investment, how large is its yield compared to other forms of investment in people and
material equipment?
v) If consumption, what are the determinants of the private demand for more or better education?
vi) What is the optimum mix of formal education within schools and colleges and informal education
outside them?
vii) What contribution does education make to the overall development of human resources?
viii) How far can we accelerate economic growth, particularly in low-income countries by
controlling the expansion of educational systems?
Therefore, economics of education addresses two major issues namely:
1. The economic value of education
This is concerned primarily with the impact of schooling on labour productivity, occupational
mobility and the distribution of income.
2. The economic aspects of educational systems
It addresses the internal and external efficiency of educational institutions, the relationships between
the different costs of education and methods of financing educational costs.
Significance of Economics of Education
Education is costly to individuals and society. Consequently, application of economic tools in
guiding decision making in education is critical. As a matter of fact, the study of economics of
education has the following benefits.
1. It helps to create awareness of the issues of scarcity of resources and hence the need to allocate
these scarce resources efficiently and effectively.
2. It equips individuals with knowledge and skills to establish areas of inefficiency in resource
allocation in an education system. That is, it makes it possible to determine, wastage rates, drop-out
rates, survival rates, graduation rates among others.
3. It makes it possible to determine the rate of returns to the different levels and types of education.
This information is useful in making decisions with regard to resource allocation for the various
levels.
4. Application of economic tools to education makes it possible to determine the contribution of
education to economic growth.
5. Economics of education is concerned with queries about choice in educational investment amidst
scarce resources and unlimited wants. It can assist a planner to allocate education resources where
most needed with optimal benefits.
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6. By using the economic tools, it is possible to go beyond the policy of management rhetorics in
the decision-making process. Consequently, managers learn to avoid making official promises
without financial backing.
7. Application of economic tools to economics of education, gives policy makers prior knowledge
about the implications of their decisions.
8. It enables individuals to appreciate the role of optimal use of education resources for efficiency
of educational institutions e.g.; by having optimum enrollments, economies of scale etc
9. Economics of education has the ability to highlight the difficulties involved in the attempt to
measure satisfactorily the effect of education on; health, income distribution, economic growth etc.
HUMAN CAPITAL THEORY
Definition: Human Capital
It refers to the stock of competencies, knowledge, skills and personality attributes embodied in the
ability to perform labor so as to produce economic value. That is, it is the stock of human
competencies, knowledge, skills and personality attributes that can be exploited so as to enhance
productivity. Therefore, human capital can be used like any other asset to generate outcomes of
value to the individual and the society.
Concept of Human Capital Theory
This theory holds the view that, the well-being of a society is a function not only of the traditional
stocks of financial capital, labor and natural resources; but also of the knowledge and skills of
individuals. This theory predicts that increased knowledge and skills will yield improved economic
outcomes for both individuals and societies. For example; schooling, a computer training course,
expenditures on medical care, good nutrition and lectures on the virtues of punctuality and honesty
are also capital. This is because they raise earnings, improve health, or add to a person’s good habits
over much or his/her lifetime.
Sweetland (1996) traces the origins of human capital theory to work of Adam Smith in the 18 th
Century and John Stuart Mill in the 19th Century. However, the modern formulation of Modern
human capital theory, traces its origins to the 1960s and the work of Theodore Shultz, Jacob Mincer
and the Nobel Laureate Gary Becker and their theoretical and empirical work on the relationship
between capital education and earnings. Generally, all forms of capital are assets that yield income
and other outputs over long periods of time. A critical analysis of human capital reveals two basic
notions namely;
1. People have certain changeable attributes that affect their labour market productivity.
Some of these attributes are;
i. General physical fitness and wellbeing.
This attribute is affected by nutrition, rest and exercise. It is important for some types of manual
labour.
ii. Manual skills ( typing, driving etc)
This attribute is affected by practice and training. Such skills are important for certain types of
manual labour.
iii. Knowledge
This attribute is affected by schooling and training. This component is critical in handling tasks that
require serious mental input.
2. People choose the different levels of the foregoing attributes rationally. They do this by
considering the following.
i. Recognizing that changing these attributes involves short-term costs and long-term benefits.
ii. Optimally choosing the level of these attributes by balancing the costs incurred and the
anticipated benefits.
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Different Ways of Enhancing Human Capital Development
i) Education
Education is a key element of human capital because it is viewed as the primary means of developing
knowledge and skills. Besides this, the level of education is a way of quantifying the quality of labor.
So far studies conducted in various countries reveal that high school and college education greatly
raise a person’s income.
Education facilitates the acquisition of new skills and knowledge that increase productivity. This
increase in productivity frees resources to create new technologies, new businesses and new wealth,
eventually resulting in increased economic growth.
ii) On-job training
Workers also learn and are trained outside school, especially on the job. The amount of on-the-job
training may range from an hour for simple tasks like dish-washing to several years for complicated
tasks e.g. engineering.
Available data indicates that on-the-job training is an important source of the very large increase in
earnings that workers get as they gain greater experience at work
iii) Experience
It generally enhances mastery of the job and therefore improves proficiency and job performance
iv) Family Background
Has a big influence on the knowledge, skills, health, values and habits of their children. For
example; parents affect educational attainment, marital stability, propensities to smoke and to get to
work on time, and many other dimensions of their children’s lives.
There is evidence that there is close relationship between the earnings, education and occupations
of parents and children
However, the opportunities provided by a modern economy along with extensive government and
charitable support of education, have enabled those who come from lower income backgrounds to
also do reasonably well in the labor market. Interestingly, the same opportunities that foster upward
mobility for the poor create an equal amount of downward mobility for those higher up on the
income ladder.
v) Technology Advancement
Expansion of scientific and technical knowledge also tends raise the productivity of labor. The
economic growth witnessed in many countries during the nineteenth and twentieth centuries can be
attributed to this.
vi) Mobility and Immigration of individuals
Educated individuals often migrate from poor countries to rich countries seeking for opportunities.
This movement has positive effects for both countries.
a) Capital-rich countries gain an influx for labor
b) Labor-rich countries receive capital when migrants remit money home
-The loss of labor in the mother country also increases the wage rate for those who do not
emigrate.
Note: Being able to move from one area to the next is the ability and a benefit of having human
capital. Therefore, to restrict people from migrating would inherently lower their human capital.
vii) Medical care/Health care
Provision good health services will improve the quality of life and by extension enhance
employees’ performance.
viii) Good Nutrition
Good dietary intakes will help to keep one in good health. This eventually improves ones
productivity.
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viii) Adult Education
By accessing adult education, adult workers hone their skills and acquire new skills that
immensely enhance their productivity.
Application of Human Capital Theory in Education
i. Has influenced policy matters in education, by giving guidelines on the allocation of resources
to education.
ii. Has influenced the type of curricula designed by countries.
iii. There is a shift towards offering curricula that have high returns e.g. the 8-4-4 education system
and vocational training through youth polytechnics.
iv. Has led to an increase in the number of middle and higher education institutions. These
institutions are crucial in equipping people with skills necessary for economic growth
v. Has influenced the introduction of bursaries and scholarships in the education sector this is
because beneficiaries can help develop their countries
vi. Has influenced the introduction of distance education which is a more cost-effective method
of financing education.
vii. Has renewed interest in Science and Technology Education. Advances in these fields are
critical in stimulating economic growth.
Criticism to Human Capital Theory
i. Not all direct expenditure in man is investment.
ii. Some consumption expenditure cannot be separated from the investment expenditure.
iii. It is often difficult to determine the magnitude of returns due to the investment. This is
because; some consumption expenditures improve the skills, abilities and productive capacities
of man.
iv. Income from investment in man is likely to impact negatively on policy formulation.
v. Human capital theory degrades man and equates him to a machine.
vi. Ignores the quality of machines and their efficiency
Characteristics of Human Capital
i) It depreciate with time
ii) It deteriorates with idleness
iii) It is flexible
iv) It is long-term investment
v) It is vulnerable to accident and unemployment
vi) It cannot be repaired
vii) Unemployment impairs the skills
Similarities between Human Capital and Physical Capital
i) Both depreciate
ii) Both have a twin function (Investment and consumption)
iii) Both deteriorate with idleness
iv) Both become obsolete
v) Both requires maintenance in-servicing etc to keep it efficient
The Link between Investment in Education and Earnings
The amount of education acquired by workers has an important impact on the labor market
experience. The most direct way that education affects the labor market experience of workers is
by increasing their productivity, thus increasing their earnings. The more education individuals
acquire, the better they are able to absorb new technologies, acquire new skills and familiarize
themselves with new technologies. By increasing their human capital, workers enhance the
productivity of their labor and of the other capital they use at work. Higher levels of human capital,
7
which are in turn primarily a result of increased education, then a positive relationship, should exist
between education attainment and earnings. The relationship between education and earnings can
also be expressed clearly using the age-earning profits. It can also be done by calculating the rate of
return to the different levels and types of education.
i) Educated people are paid higher salaries because of their increased productivities
ii) An educated farmer produces more yield than a farmer with less education.
iii) Education produces and develops the potential for creative and innovative responses to suit the
ever changing economic conditions
iv) Education infuses useful knowledge and skills as well as attitudes, motivation and values that
help to determine a workers productivity and employability.
v) Education reduces unemployment
In the presence of unemployment, individuals who get employed are those who have more
education.
DEMAND AND SUPPLY OF EDUCATION
Concept of Demand in Education
The demand for any commodity refers to the amount of a commodity that a consumer or buyer
is willing and is able or prepared to purchase at any given price over a specific period of time.
From the foregoing definition, it is implied that the amount of a good or commodity
demanded is affected by the selling price. The relationship between the quantity of a commodity
purchased and price is best expressed using the demand curve.
Now that you have defined demand, use the data below to draw a demand curve. On this
curve, the price is expressed on the vertical axis, while the quantity is expressed on the
horizontal axis.
Table 2.1: Tuition fees (price) of education and student enrolment (quantity)
Tuition fees/Price; Ksh(000) Student Enrolment/Quantity Demanded
100 10
80 40
60 70
40 100
20 130
120

100
Price in Ksh (000)

80
60
40

20
0

20 40 60

8
 Quantity (Student Enrolment): Figure 2.1: The Demand curve
Figure2.1 is a demand curve. This graph shows the relationship that exists between the price
of a commodity, and the amount of a commodity that consumers are willing and able to
purchase at a given price.
What is the relationship between the selling price of good and the quantity demanded by the
consumer?
The selling price of a commodity affects the quantity of a good demanded by consumers. For
example, if the price of a good is increased, the quantity of the good demanded by the consumer will
reduce .On the other hand, if the price of a commodity is reduced, the quantity demanded by
consumers will increase. The law of demand is derived from the demand curve .And it states that,
other things remaining constant, an increase in the price of a commodity leads to a decrease in the
quantity demanded and vice versa.
Who demands for education?
Education is demanded for; by both the state (society) and the individual (family).This
observation implies that there are two types of demand for education, namely:
a) Private demand for education
This type of demand refers to the number of persons who would like or whose parents/sponsors
are ready to enroll in the educational system under the prevailing conditions and are able to
meet the direct and indirect cost of education.
In this case, individuals are prepared to spend their scarce resources to receive education
because of the expected future private benefits/returns. It is important for you to know that the
private demand for education applies mostly to higher education.
b) Social demand for education
This refers to the demand for education by the society. In this case, education is viewed as a basic
human right. In many democratic countries, people demand education from their governments
because it is considered to be a basic human right. Education is demanded for future social
returns; such social returns include low mortality rates, improved health, economic growth (from
agriculture and small enterprises), and democratization among others.
Factors affecting demand for education
i) Educational Costs (Both direct and indirect)
When educational costs are high, the demand for education is low. And on the other hand,
when the costs are low the demand for education increases as witnessed through increased
student enrolments. You need to know that educational costs directly depend on the
level of government involvement in financing education. When the government involvement
is high, the cost to the individual will be low; consequently, the demand for education will
increase.
ii) Expected benefits accruing from Education
Generally, the society will invest more in an education that provides more social benefits, for
example; primary education. While individuals will demand more of an education that has higher
private benefits. This explains why individuals are willing and ready to pay more to attend high
performing private institutions or enroll on expensive academic programmes in anticipation of
higher future returns.

9
iii) Government policies
Government policies such as the entry requirements into certain levels of education, can also affect
the demand for that particular type of education.
iv) The level of family income.
Poor families find it difficult to pay fees. Even if free education was offered, poor families would
still find education costly because of the foregone earnings. For most families, it is expensive to
provide out of pocket allowance, buy school uniforms and stationery.
v) Availability of learning opportunities
If educational opportunities are available to a society, certain segments of that society will
take advantage of opportunities presented to them to enroll.
vi) Fashion/trend
At times there is a high demand for certain type of education simply because it is considered
fashionable.
vii) Educogenics
This refers to a situation whereby, a strong family background in education, positively affects
the academic achievement of the offspring’s. Generally, children born in homes where family
members have good education will naturally aspire to do well in school. Consequently, such
children will tend to demand for more education.
viii) Peristalistic process
This term refers to a situation, where the present generation desires more education for the
coming generation. For example; in a family, parents may desire that their children should
acquire more education than themselves. As a result of urge, the children in that family will be
obligated to demand for more education.
ix) The probability of success in finding modern sector employment.
In most cases, an individual who successfully completes the necessary schooling for entry into the
modern sector labour market has a higher probability of getting a well-paid urban job than one who
does not. Consequently, people will demand for more education to place themselves in a better
position in the job market, because job opportunities are extremely competitive.
x) Wage or income differentials.
If income differentials between the modern and traditional sectors are high, the demand for
education will be high.
xi) Demographic Factors.
An increase in population naturally leads to an increase in demand for education.
xii) Duration in School
Generally, educational programmes that take a short time to complete have a higher demand than
those that take a longer time to complete.
xiii) The level of unemployment rates.
The more unprofitable a given level of education becomes as a terminal point, the more the
demand for it increases, as an intermediate stage or precondition to the next level of education
xiv) Geographical Location
There is higher demand for institutions that are accessible than inaccessible ones
xvi) Prestige or Status
At times people may demand for more education purely for prestigious reasons
xvii) Culture (Social factors and attitudes)

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Certain retrogressive cultural practices hinder participation of certain segments of the society from
consuming education. For example, in many developing countries, girls are expected to contribute
to child care or home keeping at a much earlier age than boys. As a result, girls in such communities
are less likely to be enrolled in education.
The Concept of Supply in Education
The term supply refers to the amount of a commodity that the producers or firms are prepared to
provide at a given price over a specific period of time. In other words; it is the amount of a
product that producers are willing and able to sell at a given price, all other factors being held
constant.
The supply of education, unlike other commodities is not purely tied to a price; this is because
education has both economic and social benefits. Therefore, besides prices, the supply of
education is tied to the benefits accruing the individual and the society. If you want to clearly
understand the relationship that exists between the price of a commodity and its supply, you
have to draw a supply curve. In a supply curve, the price of a commodity is expressed on
the vertical axis, while the quantity supplied is expressed on the horizontal axis. Now use the
data in table 2.2, to draw a supply curve.
Table 2.2: The price of a commodity against the quantity supplied
Price in Ksh(000) Quantity Supplied
20 20
40 40
60 60
80 80
100 100

80
Price in Ksh(000)

60

40
20

0
0 20 40 60 80 100

11
The supply curve in figure 2.2 above shows that, if the price of a commodity increases, the quantity
supplied by producers will increase and vice versa. From the above observation it follows that;
the supply curve is a graphic presentation of quantities of a good which will be supplied by the
producer at various possible prices at a given moment.
The law of supply states that with other conditions remaining constant, when the price of a
commodity falls, the quantity supplied decreases. For you to understand the law of supply
adequately, you need to know the conditions under which the law of supply applies. These
conditions are also referred to as the assumptions of the law of supply. When applying the law of
supply, it is assumed that the following conditions do not change:
- The cost of production
- The government policy
- Methods of production
- Costs associated with transport and other forms of communication
Who supplies education?
Education is supplied by both the public and private sectors. Public supply describes education
provided in public institutions by the government while private supply refers to education
provided in private institutions either by communities through self-help projects or by individual
entrepreneurs for profits.
Factors affecting the supply of education
i) Fees charged or the price of schooling
The amount of fees charged is a key determinant of the number of places in private schools
because; private schools provide education with a motive for profits. As such, the higher the fees,
the higher the number of school places in private schools.
ii) Expenditures /Cost of the factors of production
When the cost of establishing and running educational institutions is high, the supply of school
places will be low and vice versa.
iii) Government policies
Government policies can either encourage or discourage investments in education. For
instance, bans, taxation, subsidies, directives on fees to be charged, directives on salaries, free
and compulsory education have serious implications on the quantity of education supplied. These
policies very much affect the private supply of education. For example, the introduction of free
primary education in Kenya enhanced the private supply of primary education on the presumption
that the quality of public primary education had declined.
iv) The state of the economy
Generally, richer countries supply more educational opportunities than poorer states. This is
because they have more financial capacity to invest in education
v) Technology
Modern technology immensely reduces the cost of production, hence increasing the amount of
education supplied. This explains why there is increase in e- learning programmes.
vi) Political stability
During violent conflicts, there is massive destruction of schools .This action greatly lowers
the supply of education. Secondly, during such times; a lot of resources are concentrated on the
war at the expense of schooling.
vii) Cultural Inclination

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This refers to the general orientation of a people and their propensity to embrace education. The
western world is more inclined to provide formal schooling, whereas the Arabic states tend to
promote religious education like the madrasa
viii) International obligations
These are targets articulated by international treaties, and compliance to them by a member state
is mandatory. Examples of international treaties that compel member states to provide education
include: UN declaration on Human Rights, Education for All, MDGs, specifically goal No. 2 and
No. 3 relating to Universal Primary Education and gender equality respectively.
ix) Political Pressure
Politicians through their political influence can agitate for more educational places. For example,
the demand for more Constituent University Colleges and national schools in Kenya.
x) The Level of Government Educational Expenditure.
The amount of money that the central government allocates to education greatly determines the
number of educational opportunities created.
xi) The level of aggregate private demand for education
This level is greatly affected by the number of benefits associated with education. As a matter
of fact, people will always demand for a type of education that gives them high returns.
Concept of Equilibrium and Disequilibrium
What is an equilibrium price in economics?
In economics, an equilibrium price is the price at which the quantity of a good demanded,
is equal to the quantity of the good supplied. This price is represented by the point of
intersection between the demand and supply curves. To clearly illustrate equilibrium, we need
to draw both the demand and supply curves on the same axes. We shall use the data provided
below to draw the demand and supply curve on the same axes.

Table 2.3: Data showing how both demand and supply vary with price

Supply Demand Price

10 120 (Ksh.)
5

35
60 75
45 15
35

90 25 70
120 10 120

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 Figure 2.3: The demand and supply curves
From figure 2.3, you will notice that the equilibrium price is Ksh.40.You will also realize that
at this price, both the demand and supply of the commodity are 65 units. At the equilibrium price,
the suppliers sell all the goods that they have produced, while the consumers get all the goods
that they are demanding for.
It is important for you to know that, closely related to equilibrium is term called disequilibrium.
Disequilibrium sets in, whenever the new prices disrupt the demand-supply balance that exists at
the equilibrium price.
If the new price is high, suppliers will be motivated to produce more goods. However, the
consumers will demand for fewer goods because the high prices will reduce their purchasing
power. As a consequence, there will be a surplus in supply (see figure 2.3). A surplus is the
supply of a commodity, which surpasses the demand by consumers at a given price.
On the other hand, if the new price is low, suppliers will produce less, while consumers will
demand for more because of their improved purchasing power. As a consequence, there will be
a deficit in supply (see figure 2.3).A deficit is the supply of a commodity that falls below the
demand by the consumers at a given price. However, in most cases disequilibrium is short-lived
because the market forces always strive to establish equilibrium.

COSTS IN EDUCATION AND FINANCING OF EDUCATION

Concept of costs in education
What is the cost of providing and acquiring education?
In the process of providing or acquiring education both monetary and non-monetary
expenses and sacrifices are incurred/ made. These monetary and non-monetary expenses
constitute educational costs. Educational costs are attributed mainly to; students/pupils,
teachers, buildings, materials and equipment.
What are the determinants of educational costs?
i) Educational Demand
If there is high demand for education, more resources will be devoted to providing additional
educational opportunities, thus increasing the cost of education. Generally, the increased demand
for education can be attributed mainly to the following aspects in a country: Education creates its
14
own demand, powerful political pressure to meet the demand for education, high economic growth,
and adoption of policies committed to availing opportunity to everyone, unprecedented growth in
population and the increased recognition of education in playing a vital role in economic and social
development.
ii) Technologies in Education
In most countries education still uses old and highly labour intensive technologies for instruction.
Such old technologies and practices are very expensive. Clinging to such old technologies can
immensely increase the cost of education. However, the cost of education can significantly be
reduced if modern technology is adopted for educational instruction and management.
iii) Teacher Salary Structures
A teaching force that comprises of many experienced and long-serving teachers attracts higher
salary costs than that with more newly recruited and inexperienced teachers. Consequently, a
teaching force that has a fair blend of the new and long serving teachers is more cost-effective.
iv) Drop-out and Repeater Rates
Repeaters and dropouts increase the average number of years invested per completer/graduate. The
increased number of years needed for an individual student or pupil to complete studies translates
into high unit costs.
v) Utilization Rates
The unit cost per student is substantially influenced by the rate of utilization of teachers,
educational facilities and equipment. The conventional academic calendars and daily time
schedules are enormous wasters of scarce educational resources, especially at the university level,
where expensive buildings and equipment often stand idle. The poor utilization of educational
resources increases costs in education.
vi) Market Forces
The prices of educational inputs are generally affected by the interplay of forces in the market
place. For example; if science teachers are offered more in other sectors of the economy than in
education; the educational system will forced to pay the science teachers more in order to retain
them or to encourage more students to train as science teachers. However, once their numbers
rise, the market forces will set in to determine what they are eventually offered.
Types of Costs in Education
i) Opportunity Cost: Opportunity cost is the cost of alternatives foregone. The term opportunity
cost takes cognizance of the fact that each investment option involves a sacrifice of alternative
opportunities to use the resources. This sacrifice could be either for the present consumption or for
some other form of investment. More specifically, the opportunity cost of a commodity/service is
the value of the next best alternative sacrifice made, in order to obtain that commodity/service.
Therefore, though there could many alternatives to give up in order to get what is desired, the
opportunity cost of a decision is the value of the most desirable alternative to be given up so to get
what is needed. For example, the opportunity cost of a KCSE graduate who decides to pursue
university education, is the salary of the best employment he/she would have obtained without
joining university. It is against this backdrop, that stakeholders in the education sector
need to be aware of the fact that, educational investments use resources that have alternative
uses. Some of these resources in the education sector are namely; Students’ or pupils’ time
Teachers’ time Finances/Money, Equipment, Buildings and Land among others.
ii) Recurrent Cost(s)

15
As the term implies, this is a cost that recurs regularly and covers expenditures on goods and
services that bring immediate and short-lived benefits. Thus expenditure on consumable goods
such as; materials and teachers’ salaries fall under recurrent expenditure. Consequently, the
recurrent costs generally encompass what is incurred on personnel services and consumable
supplies within one fiscal/financial year.
iii) Capital Cost(s)
These costs relate to more durable items like, land, buildings and equipment among others. These
are costs that render useful service(s) over a period of years if properly maintained. Rather than
treating the purchase of a major item of equipment as a capital cost in one year, it is prudent
to calculate the annualized value of capital expenditure by calculating amortization and
depreciation over their useful lifetime.
iv) Social Costs / Public Costs
These costs concern the society, and refer to costs borne by the society for education and
training activities at a given point of time. That is, they are those costs that are financed by the
government, generally on the basis of taxes, loans, grants and other public revenue.
v) Private Costs
These are those costs that are borne by individual students and their families in return for the
education received. Examples of private costs include; tuition fees, examination fees, institutional
supplies, purchase of uniforms, text books/manuals, transport, upkeep and foregone earnings among
others
What constitutes the social and private costs in education?
Direct Social Costs
Teachers’ salaries, Current expenditure on goods and services, Expenditure on books & Stationery,
Imputed rent, Capital Equipment
Direct Private Costs : Fees minus scholarship, books and stationary, commuter fees, uniforms,
accommodation and pocket money
Indirect Social and Private Costs
By investing in education, both the state and the individual forego or sacrifice other opportunities
to invest or use their resources.
Behaviour of Costs in Educational Investment: Cost behavior is a general term that describes
how a cost will change when the level of output changes.
i) Fixed cost
This cost is also referred to as an indirect cost. A fixed cost is that part of the cost which does not
vary as the output changes. Examples include; the rent of a building, wages of permanent
employees and the cost of installing a broadcasting network among others.
ii) Variable cost
This cost is also called a direct cost. A variable cost is a cost which varies with the change in the
level of output. That is, if more output is produced, more variable costs are incurred and vice versa.
When there are no operations, the variable cost is zero. Examples of variable costs include; wages
of temporary workers, stationery expenses, publicity expenses and raw materials among
others. However, it is important to note that in the long run, all costs are variable.
iii) Total cost

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This is the overall cost incurred for the production of a specific number of units of a commodity.
This cost is the summation of fixed costs and variable costs as shown below; Total cost = Fixed
Cost + Variable Cost
iv) Average cost/Unit Cost
This is the cost incurred in producing a single unit of a commodity. Therefore, average cost is given
by dividing Total Cost by units of a commodity as shown below;
Average Cost/Unit cost = Total cost ÷ Units of a commodity
For example, if the total cost of producing 40 units is ksh.100,000/=, then the average cost of
producing one unit is ksh. 2,500/=. In an educational institution or setting, the average costs indicate
the amount of money or resources devoted to each student in the existing system.
v) Marginal Cost
This refers to the extra expenditure incurred when one additional unit of a commodity is produced.
That is, it is an increase in the total cost due to the production of the last unit of the commodity.
This can be expressed in an equation form as shown:
Marginal Cost = Change in total cost
Corresponding change in units of a commodity
In an educational setting, the marginal cost is the extra expenditure incurred when the
total student enrolment increases by one student. The magnitude of the marginal cost will indicate
the consequences of expanding an educational institution or system.
How can you apply the concept of marginal cost to determine the optimum student
enrolment for a school?
To apply the concept of marginal cost in determining the optimum student enrollment for a
school, you need data on four variables namely: student enrolment, total cost, average cost and
marginal cost. Once the four variables have been established, you should plot a graph of
educational costs against the student enrollment. In this graph, both the average cost and marginal
cost are drawn against the student enrollment on the same axes. The point on the graph where the
average cost curve and the marginal cost curve intersect represents the optimum student
enrollment for the school

Use the data in table 3.2 to determine the optimum student enrollment for the cited
institution?
Table 3.2: Variation in educational costs against the student enrollment
Student Enrollment Total Cost (000) Average Cost (000) Marginal Cost (000)
0 5,000 - -
100 9,000 90 40
200 12,000 60 30
300 15,000 50 30
400 20,000 50 50
500 30,000 60 100
According to the data in Table 3.2 above, the average cost is initially higher than the marginal costs.
However, as the student enrollment continues to increase, the marginal costs start increasing until
they surpass the average costs. The student enrollment, at the point when average costs are equal
to marginal costs signifies the optimum enrollment. Alternatively, the optimum student enrollment

17
can be determined by drawing a graph of average cost and marginal cost against the student
enrollment as shown in Figure 3.1 below.

Average Cost Curve

Marginal Cost Curve
Figure 3.1: Educational Costs against Student Enrollment
The point of intersection between the average cost curve and the marginal cost curve represents the
optimum student enrollment. From figure 3.1 it is observed that;
i) When the average cost is falling, the marginal cost is less than the average cost.
ii) When the average cost is at the minimum, marginal cost is equal to average cost. This is a point
of optimal operation/optimal enrolment
iii) When the average is rising, marginal cost is greater than average cost
Figure 3.1

120

100
Educational Costs in Ksh(000)

80

60

40

100 200 300 400 500 600

Student enrolment

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What do you understand by the terms economies of scale and diseconomies of scale as applied
in education?
Economies of scale refer to a situation whereby it is possible to increase student enrollment in
an educational institution without incurring substantial additional costs or expenditure. On the
contrary, the diseconomies of scale refer to a situation whereby an increase in student enrolment
prompts substantial additional costs or expenditure to be incurred by an institution.
At what stage do economies and diseconomies of scale emerge in an educational
institution?
The economies of scale always exist whenever the average costs are higher than the marginal costs.
In such a situation, the unit costs or average costs will decline as the student enrolment increases,
until the point where the average costs equal the marginal costs. It is at this stage that the economies
of scale are exhausted. For example; a school that still has spare capacity to admit more students
practically demonstrates economies of scale. This because, in such a school it is possible to
increase the student enrollment without incurring substantial additional expenditure.
On the other hand, the diseconomies of scale always set in after the economies of scale have been
exhausted. This situation arises whenever the marginal costs exceed the average costs. For
example, if an educational institution whose facilities have been exhausted has to enroll more
students, there will be need to construct new buildings, purchase more books and equipment
among other things. It is this new constructions and purchases that will bring about the
diseconomies of scale. The new constructions and purchases will involve substantial capital outlay.
What can be done to enhance economies of scale in education?
• Training teachers to teach more than one subject.
• Consolidation of small schools
• Establishment of optimal class sizes.
• Increase the number of streams in schools
• Introduction of boarding schools
• Bulk purchases of materials and equipment by schools
• Integration of mass media in content delivery
• The joint use of expensive facilities and equipment by educational institutions

Sources of Funds in Education

Who finances education?
Education is financed either by the state (society) or the individual (family) or both.
Why do states finance education?
Every state has an obligation to its citizenry to finance education for the following reasons:
i) Education is a basic right
ii) Education improves human capital
iii) Education is an important variable in determining the economic growth of a country
iv) Governments are bound by international protocols and agreements to provide education for
their citizens
v) Purchase of education can be very expensive if left entirely to the market forces
vi) Education as an investment has high social returns
vii) To promote equity in education
Sources of financing education
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There are three main sources of financing education, namely; the public sector, private sector
and development partners
i) Public Sources
These are funds that come from the central government/government exchequer. Normally; the
central government obtains these funds from taxes and the sale of government goods and services.
The government uses these funds to provide bursaries, scholarships, student loans, pay salaries,
purchase equipment and materials, and establish physical infrastructure in the educational
institutions
ii) Private Sources
These refer to all those other sources of funds that are neither the central government nor their
development partners. These sources mainly include the following:
a) Fees by students/families
Educational institutions charge fees for tuition and other services that they offer to students.
As a consequence, the student/family has to pay the institutions for these services. For example,
the introduction of cost-sharing policy in Kenya immensely increased the contribution by families
to finance education.
b) Employers
In some cases employers do pay for the education of their employees, thus serving as a source of
finance for education.
c) Local community
Local communities finance education mainly through hard cash and payment in kind. In some
cases, communities establish community schools through their self-help initiatives.
d) Income generating activities
In an effort to bridge their budgetary obligations, nowadays most educational institutions
have established various income generating ventures.
e) Donations and gifts
Philanthropic initiatives by institutions and individuals are also a very useful source of finance
to educational institutions.
f) Non-governmental organizations
These organisations generally finance the education of the bright but needy students.
iii) Development Partners
Development partners provide support in form of foreign aid or external donor support to
promote the development of education in the target country. Development partners’ support can
either be bilateral or multilateral. The bilateral support is where the development partner sends
assistance direct to the recipient country, while the multilateral support is where the development
partners send assistance to the target country through agencies like UNICEF or UNESCO among
others. In most cases support from development partners is in the form of; equipment, research
funds, fellowships, scholarships, technical expertise, grants and loans.
Demerits of development partners as a source of funds for education
While it is true that development partners are a convenient source of funds for the development of
education, they do have limitations. Some of the limitations are as enumerated below:
i) The recipient nation may receive low quality personnel as technical support
ii) The foreign technical experts may not appreciate the educational needs of the recipient country.
As a consequence, they might have a negative impact in the education sector.
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iii) The recipient country may be compelled to purchase educational materials and equipment
from donor countries at high costs
iv) Technical experts may be imposed upon the recipient nation by the donor
v) Some irrelevant educational programmes may be forced upon the recipient nation
vi) Repaying the loan may be costly to the recipient nation
vii) The recipient nation may run the risk of becoming donor dependent.
viii) At times the development partners may use the financial support to achieve political rather
than social goals.
Modes of Financing Public Education
There are the three strategies employed by the state to finance public education and they depend
more on the level/cycle of education and the income level of the recipient. They include:
i) Public Subsidies
The main reason why the state funds education is that, education is universally perceived
as a human right. Consequently, if education were offered at the market price then, the poor, the
marginalized and the vulnerable would not access it. Therefore, by subsidizing education, the
state makes it possible for the aforementioned segments of the population to access education.
However, the extent to which the different levels of education are subsidized is different
in magnitude. Generally; the first/primary education level is subsidized more than say, the
secondary or tertiary level. This is because it has been proven that the social returns accruing
to primary education are higher than the subsequent levels. Through public subsidies, many
countries around the world hope to achieve Universal Primary Education (UPE), the Millennium
Development Goals (MDGs) and Education For All (EFA). For example, as a demonstration of
commitment to global agreements, the government of Kenya re-introduced Free Primary
Education (FPE) in 2003 and Subsidized Secondary Education (SSE) in 2008. Since inception,
the government has continued to subsidize university education for the government sponsored
students.
ii) Student Loans
The student loans are a very popular form of public finance at the tertiary level. This is because;
it is presumed that at this level, benefits accrue more to the individual than the state. As a result
of this, the student has to pay part of the cost for his/her tertiary education. This mode of
financing public education involves the government offering loans to bright but needy students
at a low interest rate. The beneficiary is expected to repay the loan after graduation and upon
securing employment. Most countries have developed the student loan scheme into a revolving
fund that is sustainable. For example, the government of Kenya has established a higher
education loan scheme (HELB) to enable the bright but needy students pursue tertiary education.
iii) Voucher System
This is the third form by which the public finances education. This mode involves the government
giving payments to families so as to enable their children enter the public or private educational
institutions of their choice. The payments can be made either to the parents or to the selected
schools. The key objective of the system is to increase parental choice in selecting schools, to
promote competition among institutions and to allow students from the low income families to
access private schools.
Benefits of the voucher system as a mode of financing education
a) Parents will be able to choose institutions that suit the needs of their children.
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b) The free operation of market forces can enhance efficiency because educational institutions
compete for students by offering programmes that meet the demands of parents and students.
c) Under this system, schools are more likely to offer what is relevant to the students’ needs.
Otherwise; parents will choose schools that offer programmes which are more relevant to the
future careers of their children.
d) The system can also help to reduce the control of the state on educational institutions.
e) The voucher system can be used to enhance equity in favour of the poor by giving them money
to compensate for the earnings lost.
f) In cases where parents wish to supplement the vouchers with their own money, extra funds will
be raised for education.
Shortcomings of the voucher system
It is good for you to know that, though the voucher system has advantages, it also has the dark
side which makes it unpopular in some quarters. Demerits of this system include the following:
a) If the poor are given vouchers to cover all the costs of schooling including the forgone
earnings, they will relax into their poverty and stop to work hard.
b) The cost of administering voucher system can be quite high.
c) The scheme assumes that all parents are competent to choose schools and courses for
their children. However, this is not true.
d) Many educational institutions, will concentrate more on marketing themselves instead of
strengthening their academic programmes.
e) The money made available for education is likely to be less than, under the system of education
where parents pay from their own pockets.
f) The rich will be able to supplement their vouchers more easily than the poor. Consequently, the
growth of a high cost privileged private sector of education will emerge.

EDUCATION AND SOCIO-ECONOMIC DEVELOPMENT

Education as Consumption
Generally; consumption refers to the utilization of final goods and services for immediate
satisfaction.
When does education become consumption good?
The motive for pursuing education is what determines whether it is consumption good or not. For
example, if one acquires education basically for short term and immediate satisfaction, then it will
be consumption. You also need to realize that every time you are motivated to pursue education
because of any of the following reasons, then you will be treating it as consumption:
• Knowledge for its own sake
• Personality development and psychological satisfaction
• Acculturation. That is, increasing the chances of interacting freely with people from other
cultures.
• Prestige and status in the society.
• To enhance democratic awareness
• To embrace civility and social integration
• For externalities (spill over/ indirect benefits). Externalities are benefits captured by other
people, other than those who directly receive the education. These benefits include; an informed
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 and democratic electorate, healthy populations, low fertility rates, low crime rates, social
cohesion and better work ethics among others.
• Acquire skills for personal exploits/good
• Literacy motive. The ability to read in itself brings enjoyment to an individual.
• Social capital. This is about establishing social networks for the sake of preferential treatment
and cooperation with other individuals and groups.
Education as an Investment
All investments have one thing in common, that is; they all involve postponing consumption, by
engaging capital in some form of production so as to realize benefits at a much later date.
Therefore, an investment is an activity that increases the society’s capacity to produce goods and
services in future.
When is education considered to be an investment?
Education is considered to be an investment, any time; a person pursues or spends on it for the
sake of increased future returns. Therefore education becomes an investment, if one spends on it
for any of the following reasons:
• Acquire skills that will make him/her to earn more
• To become more competitive in the labour market
• To become more productive economically
• To increase the overall lifetime earnings
Social and Private Benefits of Education
Both the society and the individual invest resources in education in anticipation of benefits. These
anticipated social and private benefits can be either direct or indirect.
a) Social benefits: These are benefits that accrue to the society after investing in education. These
benefits can either be direct or indirect:
i) Direct Social Benefits
• Increased workers’ productivity
• Enhanced innovative ability of workers
• Increased Gross Domestic Product (GDP). According to UNESCO (2010) each
additional year of schooling raises average annual growth by 0.37 percent.
ii) Indirect Social Benefits
• Reduced poverty levels. According to UNESCO (2010), 171 million people could be lifted out
of poverty if all students in low income countries left school with basic reading skills.
• Enhanced equity, gender equality and women empowerment. According to UNESCO (2010),
if women farmers in Kenya are given the same level of education as their male partners, their
yields for maize, beans and cowpeas would increase by up to 22 percent.
• Improved health standards and reduction in child mortality. For example, it has been observed
that, a child born to a mother who can read is 50 percent more likely to survive past the age of
5 years. In addition, each extra year of a mother’s schooling reduces the probability of infant
mortality by between 5 to 10 percent.
• Improved children access to vaccination and a reduced likelihood of malnutrition. According
to UNESCO (2010), in Indonesia, child vaccination rates are 19 percent when mothers have no
education. This rate increases to 68 percent when mothers have at least a secondary school
education.

23
 • Improved maternal health. For example, women with higher levels of education are more likely
to delay marriage, space out pregnancies and seek for medical attention.
• Improved fight against HIV/AIDS, malaria and other life threatening diseases. It has been
proven that, women with post-primary education are 5 times more likely than illiterate women
to be educated on the topic of HIV and AIDS. For example, in Malawi, only 27 percent of
the women with no education know that HIV transmission risks can be reduced by the
mother taking drugs during pregnancy. While on the other hand, the figure is 59 percent for the
women with secondary education.
• Improved environmental conservation. Generally, education helps people to make decisions
that meet the needs of the present without compromising those of future generations.
• Crime reduction.
• Enhanced social cohesion
• Improved global partnerships for development
• Informed participation in politics and governance
• Positive contribution to communal development
• Low fertility rates
• Enhanced mobility of labour between jobs and between geographical region
• Enhanced likelihood for innovation
• Increased agricultural productivity. According to Lockheed, Jamison and Lau (1980), education
makes a difference in productivity of a farmer.
• Educogenics. This is whereby the education level of the parents positively influences the
educational attainment of their children.
b) Private Benefits: These are benefits that accrue to the individual after investing in education.
These benefits fall into two categories namely:
i) Direct Private Benefits
• Enhanced chances for employment in the modern labour market
• Increased lifetime earnings
• Increases opportunities for further training
• Improved mobility in the labour market ii) Indirect Benefits
• Ability to read
• Enhanced social status
• Enhanced sense of prestige
• Psychological satisfaction
• Increased social capital because of social networking
ii) Indirect Private Benefits
Same as indirect social benefits
Concept of Economic Growth and Development
What is the Economic Growth of a Country?
The economic growth of a country typically refers to; a steady physical increase in the country’s
productive capacity, which is identifiable by a sustained increase in the country’s real output of
goods and services over time. It can also be simply stated as; a positive change in the level of
production of goods and services by a country over a certain period of time. Economic growth can
either be nominal or real. The nominal growth is defined as the economic growth that includes
24
inflation, while the real growth is nominal growth minus inflation. As a matter of fact, economic
growth is a quantitative concept and may not necessarily be accompanied by an increase in
the quality of life. Economic growth can be measured either in terms of a percentage
change in the Gross Domestic Product (GDP) or Gross National Product (GNP).
What Causes Economic Growth?
The factors that affect the level of economic growth are varied and are very much interrelated,
however, the some of the most basic ones are:
• The quality of labour, especially of persons in the active age bracket.
• The quantity of capital or resources available per individual worker.
• New knowledge and inventions. These can manifest themselves in the form of physical objects
or better management skills.
• Political, legal and social institutions in a country.
These institutions provide the framework in which other factors of production such the quality of
labour operate. For example, a country that has political upheavals or internal warfare is unlikely
to be conducive for long term investments. In addition to the political ambience, religious and
other beliefs also have a strong influence on growth. For example, the industrial revolution was
propelled by the protestant faith, because of its emphasis on hard work and wealth acquisition.
But on the other hand, the communist countries remained poor despite having a lot of
resources because they did not belief in wealth acquisition.
Benefits of Economic Growth
• Reduction in poverty. At times economic growth may enhance greater access to commodities
such as food, housing and clothing. Generally, these commodities enable the poor to satisfy their
basic needs more adequately, thus enabling them to improve their welfare.
• Redistribution of income without worsening the lives of people. Economic growth may change
the distribution of income so as to achieve greater equity without making anyone worse off.
• Higher standards of living. This only happens if the realized economic growth results in higher
real income per capita .In this case, there will be greater quantity of better quality commodities
available to each person for consumption.
Contribution of Education to Economic Growth
Statistics on economic growth demonstrate that it is not the growth of physical capital, but that
of human capital that is the principal source of economic progress in both the developed and the
developing countries. Todaro (1977) notes that though difficult to document statistically, it is
apparent that the expansion of educational opportunities at all levels has contributed to the
aggregate economic growth in a number of ways namely:
• Education creates a more productive labour force that is endowed with knowledge and skills that
promote economic growth.
• Education provides widespread employment and income earning opportunities for citizens.
• Education serves as an instrument that supports programmes designed to meet other basic needs
such as nutrition or shelter.
• Education gives people a base of knowledge, values, attitudes and skills which equip them with
the potential to learn and to respond to opportunities.
• Education accelerates the rate at which the country’s stock of knowledge advances. This leads to
greater research, discoveries and inventions among others.

25
• Education complements physical capital by providing the human capital which managers need
for the effective exploitation of physical capital
• Education reduces the fertility rates, which eventually reduce the population growth. The high
rate of growth in population tends to reduce economic growth
• Education promotes entrepreneurship and technological advances
• Education improves co-existence and cohesion between communities. No growth takes place
against a background of war and animosity.
• Education increases agricultural output .This increase contributes to economic growth and social
transformation.
• Educated people are more likely to eat healthy, nutritiously and are therefore healthier. A
population that has this combination participates more in productive and economic activity.
• Education provides the kind of training and education that promotes literacy, numeracy and basic
skills, while encouraging modern attitudes on the part of the diverse segments of the population.
• Education inculcates sound consumer habits
• Education improves the management skills at the various levels namely; household, business and
community levels.
• Education breaks psychological barriers by making people more liberal
What is Economic Development?
Economic development refers to the sustainable increase in the standards of living of people
in a country. This concept takes into consideration the increased per capita income, better
education, better health as well as environmental protection. The economic development process
supposes that legal and institutional adjustments are made to give incentives for innovation and
for investments so as to develop an efficient production and distribution system for goods and
services. On the whole, economic development is a qualitative concept.
In its simplest form, economic development is the creation of wealth for all citizens within the
diverse layers of society so that all people have access to better quality of life. The United Nations
has developed a widely accepted set of indices to measure development against a mix of composite
indicators. These indicators fall into two main categories mainly:
a) United Nations Human Development Index (HDI)
This index measures a country's average achievements in three basic dimensions of human
development, namely:
• Life expectancy
• Educational attainment
• Adjusted real income per person
b) United Nations Human Poverty Index
(HPI)
This index measures deprivation using the following percentages, namely:
• Percentage of people expected to die before age 40 years
• Percentage of illiterate adults
• Percentage of people without access to health services and safe water
• The percentage of underweight children under five years

26
Closely related to economic development is a term called social development. Social development
refers to progress in the social welfare in the country’s population. Some of the parameters that are
used to assess the level of social development of a country include:
• Level of inequalities between people
• Positive cultural practices
• Fairness of the Justice system
• The status of democracy
How does education contribute to socio-economic development?
In overall, education contributes to the socio-economic transformation of the society by
achieving the following:
• Increasing the economic productivity of people. Through education, people are equipped with
knowledge and skills that enhance productivity.
• Equipping people with knowledge and skills that help them to stay health. This can be reflected
through reduced mortality and increased life expectancy.
• .Increasing agricultural productivity of farmers. Educated farmers readily adopt new farming
techniques that help to increase their agricultural output.
• Enhancing the business enterprise of people. Entrepreneurship helps to generate income and
employment opportunity.
• Breaking cultural beliefs and practices that are retrogressive to development. For example, by
breaking gender stereotypes, women can effectively participate in the labour force and national
development
• Facilitating the introduction of new technologies that can be integrated in nation building.
• Enhancing national unity.
• Redistributing income across the; regions, races, gender and socio economic backgrounds.
• Reducing fertility. Education makes families more aware and willing to adopt family planning
practices.
• Literacy/education has positive impacts on the lives of people in rural areas.
On the whole, economic development refers to the social and technological progress. This
implies a change in the way goods and services are produced, not merely an increase in
production, achieved using the old methods of production on a wider scale.

EUCATIONAL PLANNING
Definition of Concepts:
a) Planning
Has been defined by various scholars:
• According to Sergiovar (1980) it is a process which proceeds decision making.
• According to Cardoli (1978) it is the selection or identification of the overall long range goals,
priorities and objectives of the organization as well as the formulation of the various courses of
action to be followed in these priorities & objectives.
• Poe (1980) feels that it is the process of rational decision making done sufficiently in advance
to promote more effective operation of institutions such as schools.
b) Educational Planning

27
• It is the application of a rational systematic analysis to the process of educational development
so that education is made more effective and efficient in responding to the needs and goals of
students and the society (Coombs, 1970).
• Is a rational process of preparing a set of decisions for future actions directed at achieving goals
& objectives by optimum means
• It is the action of deciding in advance what to do, when, how and who to do it.
• It is rational because it involves a lot of effort to make a decision.
• Planning entails selecting among alternatives, future courses of action from possible attainable
objectives and determination of ways of achieving them.
Therefore, planning is a vital activity in societal guidance, since it narrows the gap between where
the society is now and where it wants to proceed.
Characteristic Features of Planning;
• It is futuristic in nature
• It is action oriented-entails carrying out well selected activities to achieve specified goals
• It is a rational process
• It involves selecting among possible courses of action the most ideal to achieve the desired
goals in the most efficient way.
Why should we plan education?
Enables society to rationally allocate scarce resources (both human & material) in the education
sector. Reduces misallocation of resources & wastage-prerequisites for increasing returns from
education.
• For equitable allocation of educational resources to all social classes & geographical regions
therefore ensuring balanced development
• Helps control the problem of educated unemployment which is endemic in developing
countries. Education should be planned according to the skills demanded by the labour market
• Gives society an opportunity to bring onboard emerging trends in educational planning from
other parts of the world. Less developed countries have to borrow new ideas to keep pace with
technological changes in the developed world
• Helps to avoid serious shortages or surpluses of manpower
• Education is a prime mover for national development and therefore must be provided in a
streamlined, systemic or planned manner
• To enhance efficiency in the educational system & maximize the benefits of education
Basic Functions of Planning
i) Normative function
Involves decision making by high ranking beauracrats, citizens, and professional groups. E.g.
Economists concerned with goal setting by 2020, Kenya has to be industrialized. National
Educational goals were set by politicians in 1963 (Ominde Report), Millennium Development
Goals, and Kenya’s Vision 2030.
ii) Technical function (Strategic function)
Focuses on formulation of goals as follows:
• Identify your target
• Identify procedures for achieving your targets (human, financial & physical resources).
Technicians are well trained to deal with this function (are statisticians). MoE has a planning
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 unit which forwards their plans to the Ministry of Planning & National Development to
synchronize into the plans for the nation.
iii) Implementation function (Operational stage)
Refers to the procedures for fulfilling targets. It’s composed of education offices, quality assurance
officers, headteachers, teachers etc.
iv) Control function (evaluation function)
This is the unit that ensures that all the functions interact
Features of a Good Educational Plan
An educational plan should be effective & efficient in order to enhance its usefulness. The
following features characterize a good education plan.
• It should taken a longer range view since it takes time to implement desired changes in educ.
Short range (1-4 yrs), middle range (5-10 yrs), long range (10-25).
• Should be integrated within the wider framework of the development process in the society. It
influences and is also influenced by evolving socio-economic developments within the society.
• Should be comprehensive enough to cover all types of education- formal, cater for
disadvantaged groups.
• Should take into consideration the external forces that might work against its intended goals.
Interests of pressure groups must be considered, e.g. KNUT, KUPPET
• Should focus on the quantitative (linear) and qualitative aspects of education. Meet social
demands of educ., source & dispense teachers, equipment & learning materials.
• Should have room for evaluation- both formative and summative- to enable planner identify
achievements & failures.
• Should not be monolithic formula to be imposed on all situations. Plan should be flexible so
that the planner changes it in the light of changing circumstances within society.
Education Planning Process
• Refers to the activity of stages a planner follows in translating an idea or thought into a project,
service or an operation.
• It is a dynamic process where all the activities are interrelated & planners of each stage must
do so in consultation of the whole plan.
Steps in Education Planning Process
i) Need Identification
The measurable discrepancy or gap between current outcomes & desired outcomes. At this stage,
the need for change, improvement, reform or development of an existing system is conceived. This
need is triggered off mainly by a report of a commission of inquiry or may surface from the local
media, barazas or even from political pronouncements. Mackay Commission of 1981 triggered the
need to restructure the 7:4:2:3 system into 8:4:4. The need identified should be significant though
the degree of significance depends on the social importance of the proposed educational
objectives. All identified needs should be documented as this helps to provide basic information
for setting valid goals to better or improved education system.
ii) Feasibility Study/ Situational Analysis
Several factors determine the feasibility of the plan. Most important is the appropriate political
authority. Along with political authorization, technical feasibility & cost estimates are the other
aspects that should be considered at this stage. The planner collects data & analyses to establish
facts, references, priorities, limitations and availability of resources among others.
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It is a test of a systems proposal according to its workability & impact on a society as well as its
ability to meet user needs and effective use of resources. This stage helps the planner to know where
they are and where they want to go.
iii) Drafting or Formulation of the Plan
It is the most important stage. Planner establishes the general planning policies e.g. considering of
material goals of education. Also establishes the planning approach to be adopted depending on the
task at hand and the resources available. Objectives should be specific, practical, realistic and
achievable. This is because they govern the lines of operation & appraisal done during and at the
end of the project.
Several things should be done for the planning to be successful. They include:
a) Identification of resources e.g. manpower, money, materials, machines
b) Identification of leadership & the control systems of the project e.g. Leadership should be
dynamic to help control & focus.
c) Budgeting and general costing of the plan & project. Planners should consult experts’ e.g.
economists, accountants to appropriately allocate the resources.
d) Establishment of information systems. Proper coordination & communication provide a good
feedback method.
e) Drawing up of time schedules according to the various phases of the plan or the budget.
iv) Piloting Planning Stage
It is also referred to as trial stage. It involves the implementation of the plan on a small scale to
establish its suitability, validity, viability and achievability. A few selected institutions are picked
from different geographical regions and districts. Use a representative sample to cover a diverse
environment- rural/ urban, new/old schools, large/small, public/ private. Pilot plan reveals practical
difficulties or problems so that improvements can be made before full implementation of the plan.
v) Implementation Stage
It involves going full scale. It’s the expansion of the pilot plan to cover the whole scope of the plan.
Done in phases or by levels of educ. & it may also follow regional patterns. All planning agents-
politicians, parents, teachers, learners, and religious leaders are involved. Plan must be written in
simple & specific language (not mixed with technical & professional jargon which the
implementing agents are unfamiliar with). There should be enough & effective administrators to
ensure the coordination of the effort of all implementing agents.
vi) Evaluation Stage/Appraisal
Evaluating the plan is an action to show that the plan has been completed & whether the cycle of
educational planning is working or not. The purpose is to measure or determine the extent to which
set objectives have been achieved. Therefore, at this stage queries on the degree of success or failure
are sought.
Importance of evaluation
It basically helps planners to assess/ compare:
• Planned & actual achievement
• Cost of achieving the objectives
• Time taken to achieve the objectives
Both continuous & formative evaluation is done throughout planning process. Summative
evaluation is crucial & normally done at the end. Good planning uses results or feedback of
evaluation in future.
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Problems Facing Education Planning
In spite of the DC’s having economic and educational planning units, they face challenges:
i) Lack of technical knowhow
Educational planners are not politicians to formulate educ. objectives & policies nor administrators
to implement decisions to achieve the objectives. They only develop and prescribe alternative
means by which to achieve the objectives. They only evaluate the achievement of their objectives.
They are faced with problems of lack of statistical data from sub-county and County Education
officers and the Ministry of Education.
ii) Political Factors
Politicians in DC’s have a tendency of introducing new policies thereby catching planners off
guard. E.g. in Kenya, free milk led to double enrolment in 1978. In Tanzania, govt. abolished
primary fees in 1973 leading to double enrolment. In 2003, NARC govt. introduced FPE which led
to over-enrolment without regard to physical facilities, teachers, funding and learning teaching
facilities. How do planners reverse the scheme to plan for the same? Building of prestigious
institutions in some constituencies done by politicians to gain political mileage.
iii) Inaccurate Population Data
Planners need accurate demographic data in terms of age structure, sex ratio, occupation, household
income and geographical distribution. Individuals give false information deliberately or due to high
levels of illiteracy. In some areas, the data is doctored for political reasons. Poor spatial coverage
by enumerators also leads to inaccurate data. The planners are unable to forecast school enrolment
by age and sex and hence resources.
iv) Inadequate Funds
Proper planning requires enough money which is scarce in many instances. Funds for FPE have
been withheld by the World Bank due to corruption that has marred the education sector.
v) Rapid Population Growth/ Fluctuations
Rapid population growth makes it difficult for accurate planning in education. The increase in
population leads to raised govt. expenditure on basic items like food and health at the expense of
education. Kenya’s population growth stood at 4.1% (1990), then dropped to 3.4% (1993) making
it difficult for accurate planning.
vi) Time Element
Planners are not given adequate time to plan and have plans adopted. Politicians may compel
planners to come up with short- range plans lasting for less than five years. This leads to haphazard
planning and implementation thereby impairing the entire planning exercise.
vii) Wasteful Imbalances within Educational System
Poor co-ordination of education development at various levels poses a problem. There are instances
whereby primary school enrolment is increased while the secondary school sector is not
correspondingly expanded. In Kenya, more than half the KCPE candidates do not get places in
secondary schools. This affects the transition rate.
viii) Reluctance to Implement Educational Plans
Some communities have a negative attitude towards educ. due to the fear that it would threaten
time-honoured traditions. Patrilineal family systems make it difficult for some communities to
educate the girl-child. So the effort by planners to achieve equality appears to be an elusive goal in
Kenya.
ix) Natural and Man-made Catastrophes
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Natural and man-made calamities such as HIV/AIDS and political conflicts affect educ. planning.
Treating AIDS patients has increased the healthcare budget that can be devoted to educ. Death of
teachers, parents & students impacts negatively on educ. efficiency. Death of teachers increases
student-teacher ratio compromising quality of education. Most DC’s experience cross-border
military conflicts or internal political unrest. Young boys stop schooling and join other combatants
in the battle zones. Students flee to safer grounds lowering enrolment in the affected areas and
causing over-enrolment in neighboring areas.
x) Curriculum Relevance
There is overemphasis on the academic dimension at the expense of non-formal aspect which’s
crucial in initiating the youth to the basic survival skills in the world of work.
Suggested Solutions to Problems Facing Education Planning
• Governments in DC’s need to establish independent planning units and support them both
morally and financially.
• Governments should improve the competence of educational planners thru relevant trainings.
• Governments should come up with clear educational policies so that planners know what they
are planning for.
• Educ. Planning should be accorded a holistic approach so as to address emerging issues such
as relevance, access and equity.
• Politicians should refrain from politicizing educational matters.
• Education managers at grassroots level should be involved in planning since they are important
stakeholders. Compliment traditional (centralized) approach with participatory approach.
1. EDUCATIONAL DATA
Data is very vital in planning and is obtained through; Census, sample survey and vital registration.
It includes demographic variables such as live births, deaths, occupation, residence, religion,
gender, income, size of household and educational level of the members of the family.
Relevance of Demographic Data
• Structure by Age & Sex- This data is useful in estimating the school age population, number of
ECD children, centres, teachers and teaching materials planned for. Sex structure helps planners
to estimate the no. of single sex schools.
• Geographical Distribution of Population- planners make decisions about types of schools to be
constructed in an area (day/ boarding) based on population density. Low density areas need
boarding schools to counter the twin problem of time and distance. Pastoralist communities
need mobile teaching units and out -of- school learning programmes. However, location of
learning institutions in the DC’s is based on political patronage technical grounds.
• Level of Education of household members- helps planners to discern gender inequalities .in
educational attainment. Planners can design strategies to minimize any anomaly. In Kenya,
affirmative action introduced i.e. university entry cut-point for girls lowered. In the US, first-
time college potentials in families are highly encouraged by being offered scholarships.
• Distribution of Population by Sectors of Economic Activity. Primary, secondary and tertiary
sectors. Planners identify areas with shortages in human resources and thereby plan for
educational programmes to address the identified shortfall. Some people are engaged in more
than one activity hence the data given not always reliable.

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• Census of teachers- for teacher-pupil ratio. Age of teachers’ forms a benchmark for planning
strategies to replace those who retire.
Causes of Inaccuracy in Demographic data
• Respondents tend to give wrong information about age during the census exercises by either
overestimating or underestimating their age.
• Errors of omission occur due to poor spatial coverage. This problem emanates from lack of
means of transport to cover all parts of the country, bad weather or insecurity in some areas.
• There is carelessness in recording and reporting of census data by enumerators.
• There is failure to report on vital events in the population, such as deaths, births, marriages and
divorces due to illiteracy (ignorance)
• Sampling errors occur, for instance, when the sample selected during sample surveys is not
representative of the desired character of the larger population.
• There are lack modern data analysis tools such as computers.
• There is lack of adequate geographical base maps to guide enumerators.
2. APPROACHES TO EDUCATIONAL PLANNING
There are 4 basic approaches education planning
a) Manpower Approach
b) The Social Demand Approach
c) Cost Benefit Analysis Approach / Rate of Returns
d) The Basic Needs Approach
a) The Manpower Approach to Education Planning
This approach looks at education as an investment. It is concerned with the analysis of the market
needs of a country in terms of its human resources and project manpower for future needs.
Therefore, it’s an attempt to provide the country with suitably educated people to meet its
manpower needs at various levels. It considers the development of human resources through
education as a basic condition to economic growth. Its argued that the higher the number of the
educated lot of a country, the more developed that country would be. The approach is thus
concerned with the relationship between all institutions, the existing number of students available
& the employment opportunities available in the modern technology. It seeks to answer key
Questions:
• How many jobs will be vacant in the economy by end of target year?
• What kind of skills will be needed?
• What kind of education should be offered?
• How many students are required?
There are three methods to project the demand for manpower
i) Employer Data Based Method
-Simplest method of forecasting human resource needs in an economy. Employer in every ministry
provides statistics of the no. of employees required in a given time frame and this’s forwarded to
Ministry of Planning & Manpower Development. It involves getting the mean aggregate of all the
employer manpower requirements. Employers estimate annual losses of workers through dismissal,
retirement, death, voluntary resignation & transfers. This data is used to make projections over the
country’s manpower needs.
The method has two shortcomings:

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• It’s incapable of forecasting long-term human resource needs since it’s not easy to project the
economic state over a long period.
• Not effective as some data may not be sufficient due to poor spatial coverage and response rate
by employers.
ii) Traditional High & Middle Level Manpower Survey Technique
It involves taking inventory of both middle & high level human resource employees in both private
and public sectors of the economy. Inventories are prepared to show available human resources by
numbers & qualifications, physical facilities and financial resources. Inventories help the
administration to optimize the use of their facilities to determine the best possible location,
distribution & utilization of resources. They help identify the educational needs of the school and
the conditions of the present facilities. Estimates from the inventories make it possible to estimate
the present and future demands for human resources by occupation and category.
iii) International Comparisons
-Involves taking time series data on employment from a single country with similar experiences
with the country in question or cross-sectional data from a range of countries. Collected data is then
used to make decisions pertaining to investment in human capital in order to avoid shortages &
surpluses in future.
Arguments for Manpower Approach/ Advantages
• Examines the extreme gaps and imbalances in the education output pattern, i.e the output of the
education system against the number of jobs available in the sector. This helps the planners to
see whether the education system is meeting the manpower requirements.
• Gives useful guidance on how education qualifications of the labour force ought to resolve.
Thus aids in constructing the occupational pyramid of the labour force into educational
structure.
• It aims at self-sufficiency in trained human resources important in economic development.
• Essential for macro planning purposes because it adopts holistic approach to plan manpower
for the entire economy.
• Offers guidance in changes required in education e.g. curriculum so as to produce relevant
labour force.
• Manpower perceived by administrators, policy makers & the public in general as a more straight
forward, simple and accurate technique.
Arguments Against/ Disadvantages/ Limitations
• Confines itself to high level manpower and ignores low level manpower that is equally crucial
in the country’s economic development. The informal sector should not be ignored as it
provided employment for retrenches in the 1990’s when Structural Adjustment Programmes
(SAPS) were adopted by IMF & World Bank. For instance, in Kenya, Formal sector declined
from 59% (1990) to 45% (1994) & Informal Sector rose from 39% to 54%. Kenya has tried to
upgrade operational & marketing skills among ‘Jua Kali’ employees. A lot of funds set aside
for Technical & Vocational Educ.- many polytechnics well funded.
• It is difficult to make accurate projections of labour requirements in an economy due to socio-
economic, political & technological changes. E.g. ICT may create unemployment as it is capital
rather than labour intensive.

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• Relies on borrowed employment classification & educational requirement for each job category
from the western world. i.e. educ. Qualifications for an engineer in DCs not same as LDCs.
• Current data in LDCs & no. and category of employees in different sectors may not always be
available.
• Approach tends to limit educ. planning to economic ends yet it is not an investment good but
also consumption good. People may pursue educ. for non-financial gains- to enhance status or
converse in a foreign language.
• Approach fails to take into consideration the costs involved or the capability of a nation to
finance its labour development. 8-4-4 system to offer technical & vocational skills for self –
employment (Sifuna, 1990).
• Approach does not take into account the repeaters who may take long before graduating to
occupy the projected employment opportunities & dropouts who may not have qualified to take
up their allocated positions in the labour mkt.
• Approach relies on the existing labour mkt. rather than on the optimal use of the available
human resources.
b) The Social Demand Approach
It refers to the aggregate/total demand for school places (education) in a nation. The approach is
guided by the need to provide educational facilities to meet the pressure of more admissions into
the education system by parents.
This model has the following characteristic features:
• Views education as a consumption rather than an investment good. Basic aim of education is
to develop the learner irrespective of whether he/she acquires gainful employment or not.
• Emphasizes on the right of the individual to be educated
• Views education as a service or a basic human right
• Assumes that the society has adequate resources to support the education sector
Kenyan Situation
After independence in 1963, the government expanded education to increase education
opportunities for Africans. E.g. in 1971-tution free primary education in geographical
disadvantaged districts (Marsabit, Isiolo, Samburu, Turkana, West Pokot,Tana River & Lamu).
Similarly, in 1973-Presidential decree in whole republic class 1-6- free education. Increased social
demand for education & hence enrolment increased from 1.8m (1973)-2.8m (1974).
Why did the government adopt the social demand approach in the provision of education
after independence?
• To fulfill its pre-independence election campaign promise to offer free universal primary
education once the country attained independence.
• It was argued that education was a potential tool for promoting national integration which was
essential for accelerating development.
• Education was viewed as an essential means of producing trained human resources to occupy
vacancies left behind by the white expatriates.
• To rectify the anomaly which existed earlier by offering every school-going child an
opportunity to get education. Africans had limited access to education before independence.
• Education was viewed as a basic human right in line with 1948 UNESCO convention to which
Kenya was a signatory.

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• 1961 Addis-Ababa conference- African ministers for education met to chart the course of
U.P.E. They set a target that by 1980 all African countries would have attained 100% literacy
rate.
• An increase in popular demand for education in DC’s led to an increase in enrolment levels
especially primary & secondary subsectors.
Discuss the strategies used by the government to apply Social Demand Approach
• Introduction of FPE and FDSE
• The education Bill 2012
• The Kenyan constitution
• Provision of school milk in the school feeding programmes
• Chief’s Act-compels parents to take children to school
• HELB loans
• Module II programs
Factors that have increased the Social Demand for Education
• Population increase
• Lowering costs of education- school fees guidelines issued to make education affordable.
• Introduction of FPE and FDSE
How to Reduce Demand for Education
• Raise cost of education e.g. tuition fees
• Raise the cost of textbooks, learning/teaching materials
• Raise interest rate of HELB loans
• Lower benefits of education e.g. salaries, wages
• Abolish other allowances e.g. house, medical, travelling, hardship e.t.c
• Impose a graduate tax
• Create jobs at various levels of the education ladder
Advantages of Social Demand Approach
• It is an important approach that ensures that everybody is educated & enables individuals to be
active in the development of the nation
• Ensures that individuals especially the economically disadvantaged acquire education as a
basic right
• Does not discriminate on any category of people in the provision of national education. It
ensures equality in the provision of education across the board.
• It is an ideal starting point for laying foundation for educational planning for the future. Was
used by post-independence DC’S to bring desirable changes in socio-economic & political
realms.
• Can be used as a tool for stimulating demand for education in a society where many people
have a negative attitude towards education.
Limitations of Social Demand Approach
• Over stimulates the popular demand for education and overstrains the existing resources.
Compromises quality & efficiency of the education system leading to wastage, e.g FPE.
• Assumes that investing in education is the best way of promoting development in a nation yet
other key sectors like agriculture, transport, industry play a vital role.

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• Overlooks the imbalance between the output of an education system and the needs of the labour
market. Certain categories of human resources overproduced while others are under produced
creating the problem of educated unemployment.
• Forecasting demand for low levels of education (prim, sec) is easier since planner gets data
from parents. It’s difficult to forecast demand for tertiary education in districts where many
pupils drop-out at the primary school level due to poverty.
Application of SDA to Education Planning in LDCs
• Used by many African states after independence to satisfy the social demand for education.
Ghana 1957, Nigeria 1958, Tanganyika 1961, Uganda 1962, Kenya 1963.
• Africans started their own schools 1920’s-40, Kisii, Kakamega. Churches began schools
• 1980’s quota system in Kenyan schools 85% province & 15 % all over the country to join
secondary schools, harambee schools became district schools.
• 1980’s universities came up-Egerton, Moi. 1990’s JKUAT colleges-Laikipia, Maseno. Private
universities came up to meet the demand. Nazarene. USIU,CUEA, Baraton, Kabarak (no
charter)Kenyans have flown out in search of education.SDA has led to overproduction from
our schools hence unemployment.
Options for Unemployment as a result of SDA
• 8.4.4 system- self reliance
• District focus for rural development
• Setting up Jua kali sector
• Graduate rural loan schemes
• Career G & C in schools
c) Cost-Benefit Analysis Approach/Rate of Return Approach
This’s the systemic evaluation of costs and benefits of some form of investment in order to assess
the profitability of education. It measures the economic profitability of an educational investment
or project by providing a means of determining its future benefits in the light of the costs that must
be incurred in the present. It is thus a guide to rational allocation of resources among competing
ends in education (primary, secondary, university).The government should only invest where the
benefits/returns are high. The objective is to encourage (through higher spending) the expansion of
the level of education that exhibits the highest benefits relative to costs. Educational benefits are
measured in terms of extra lifetime earnings enjoyed by the educated human resources in the
economy. This is based on the assumption that individuals secure employment once they come out
of the school system and consequently earn more incomes than their less educated counterparts.
Costs on their hand are measured in terms of money or direct costs e.g. capital expenditure on
physical structures and recurrent expenditure on school fess and staff emoluments and indirect or
opportunity cost.
Costs of Education
Value of teacher’s time, books, buildings, accommodation, students time (students remain in school
when they could otherwise work and earn. Are also withdrawn from family, friends), fees,
stationery, travel, food, worker’s salaries etc
Benefits of Education
The future value is worked out in relation to what’s spent now. Educational inputs such as skills
and knowledge makes one have improved capacity of productivity. The productivity of an educated

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worker is higher in terms of increased output, later performance higher earnings. Earnings increase
with age.
i) Quantitative Benefits of Education
Higher salaries, higher pension, allowances (medical house & commuter allowances,
responsibility, entertainment, holiday, transfer, telephone, wardrobe, risk allowance)
ii) Non-quantifiable Benefits
Law-abiding citizens, disciplined workforce, good citizenship knowledge, literacy skills, role
modeling.
Advantages of CBA
• CBA offers guidelines in decision making on how much the society should invest in education
visa vis other sectors of the economy. It enables planners to identify levels & types of education
to allocate more funding in light of the expected private & social benefits.
• Planners can use CBA to increase profitability of a given level or type of education by either
increasing its benefits or decreasing its costs. Benefits increased by-widening range of skills in
the curriculum. Costs are lowered by reducing time taken to graduate.
• CBA provides information on the economic consequences of alternative investments in
education. Planners can make rational decisions on whether to allocate more funds for primary,
secondary or tertiary levels.
• Provides vital information to the planner on the relationship between education & the labour
market. Planner able to estimate costs involved in producing different categories of human
resources in a nation & the salary they are able to acquire from the labour market
Shortcomings of CBA
• Earning differentials used to reflect rate of returns may reflect other qualities of an individual
e.g. innate ability, experience, level of motivation of motivation, social background, gender,
and occupational wages. This may not necessarily reflect investment in education. Education
not sole determinant of income & success.
• Education has direct benefits and spill-over benefits (positive externalists) or third party
benefits.
• CBA assumes that all graduates of an education system will be employed but when graduates
remain unemployed, CBA becomes nullified as an investment of measured education
investment.
• Data on age earning profile provide rate of return profile in future, but future conditions are
difficult to predict i.e. technology may change and thus render skills being developed obsolete.
• Some private investors e.g. parents are oblivious of educational benefits thus their decisions are
not based on future monetary returns.
d) Basic Needs Approach
In the 1950’s & 60’s development was seen to be synonymous with ‘economic growth’. Economic
growth was measured in terms of GNP per capital.LDC’s were given targets of 5% for first
development decade of 1960’s. The target was exceeded in the 1960’s & 70’s. Despite these
achievements, the development decades were seen by many observers as a failure because of the
following reasons:
• A great mass of people in countries where growth took place were often a little better off &
sometimes were poorer.

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• Poverty can exist side by side with economic growth.
With apparently satisfactory economic growth, it can be assumed that the trickling down effect
(wealth sipping down from the wealthy) would help all the people to from whatever growth that
took place. But now it is apparent that this process does not occur. If it does, only too small a % of
this growth reaches the poor. Thus the turn of events has left the poor disadvantaged because:
• Poor masses have not benefited from the growth
• There’s widespread unemployment
• Government policies have helped the rich urban dwellers at the expense of the rural poor.
New Definition of Development
Disappointed by this state of affairs led to new definition of the concept of development. This
emphasized distribution of wealth and income in the interest of the poor. In 1976 ,the world
conference on employment proclaimed: National Development Plans should include explicitly the
promotion of employment and satisfaction of the basic needs of each country’s population. The
new approach to development places emphasis on
• Meeting the basic needs of the poor.
• The core needs are food, shelter, clothing, health, education, housing, sanitation
• Basic needs evolve through time and standard will rise with growth
• Some needs are non-material in nature eg human rights, freedom participation, choice & self-
reliance.
• Structural changes will be needed to re-distribute assets and income.
BNA spelt out human needs as follows:
• Food- UN Urgency suggests that an adult manual worker needs 300 calories p/day and 17 g
protein.
• Shelter-must protect one from bad weather, toilet facilities fall under this
• Clothing-suitable for the climate, work & people’s customs.
• Education- seen in terms of years of completing schooling, student ratio, number of pupils per
class, dollars spent per pupil, and the target set for functional literature numeracy.
Therefore, BNA emphasizes objectives of education as:
• Preparing people for their roles as mothers and fathers.
• Helps people to shop wisely.
• Helps people to use their time well
• Should fit people for their roles as citizens and to take part in the local and central government.
• Should inculcate scientific attitude to nature, nutrition, storage & food preparation
• Should make people know their rights & duties
• Should help people develop ethical values & attitudes
• Should make people understand the use for & working of taxation.
Other Basic Needs
• Water & Sanitation: Refers to availability of clean water & the number of homes with toilets.
• Health: As a basic need refers to monitoring incidences of disease to reduce mortality rates.
Also refers to the ratio of people to medical workers and this should be fixed at an acceptable
rate. C0’s 1:20, nurses 1:100, doctors 1:1000 in Kenya suggest 1:20 Doctor.
The BNA also talked of non-material needs such as:
• Popular partification
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• Cultural identity
Advantages of BNA
• It has a great deal of intellectual & political appeal. It clarifies equality problems, urbanization,
environment and the role of multinational concerns in the issues of DC’s.
• With the BNA, we may with fewer resources reach agreed targets of development as it reduces
use of non-basic needs e.g. expensive urban projects such as big hospitals. Consequently a
nation would have better educated people, better skilled, healthier motivated people.
Disadvantages of BNA
Although accepted in DC’s, they view it with suspicion in so far as they think this approach may
be a plot to divert them from their aim to create a fairer international economic order. One of the
counter arguments is that although incomes are low, basic needs must be met now. The poor cannot
wait for expensive technological services to salvage them. It is argued that the approach transfers
essential goods & services to the poor & hence raises their level of consumption & this makes the
level of investment to fall.

CONCEPT OF UNEMPLOYMENT
What is unemployment?
To most, the word, unemployed means being without work. Generally, unemployment is a
condition which arises when people are able to work, are available and are actively seeking for
work, but cannot find a job. However, the condition does not include students, retired people or
children. The condition of being without employment is measured in terms of
unemployment rate. Unemployment rate refers to the number or proportion of people in the active
working population (labour force) who are unemployed or have no jobs. The labour force comprises
of all those people in employment or registered as being willing and able to take up a job.
Unemployment rate = Unemployment labour force X100
Employed + Unemployed labour force
An unemployed person is one who is an active member of the labour force and is able to work
but is unable to find work during a specified reference period (a week or a month or a year)
Different types of unemployment?
Broadly, unemployment can be divided into two main categories, namely: voluntary, and
involuntary, unemployment. Voluntary unemployment arises due to reasons that are specific to
an individual, while involuntary unemployment is caused by a large number of socio-economic
factors such as the structure of the market, level and composition of aggregate demand and
government intervention among others. Generally, unemployment is classified into different types
on the basis of its nature, cause and duration of unemployment. They include:
i) Structural unemployment
Unemployment arising as a result of mismatch between the existing skills of workers and the
requirements of the job. In this case the jobs that are available demand for new skills and
qualifications. Consequently, persons with old skills do not get employment in the changed

40
economic régime, and remain unemployed. Generally, structural unemployment is long term
and can be attributed to the following conditions:
• Occupational immobility of labour .That is difficulties in learning new skills applicable to a new
industry, and technological change.
• Geographical immobility. That is the difficulty in moving to regions to get a job.
• Technological change. Generally, if labour saving technology is adopted, there will be a fall in
demand for human labour.
• Structural change in the economy. For example, a decline in the number of coal mines due to lack
of competitiveness will render many coal miners unemployed. As a consequence, the miners may
find it difficult to get jobs in new industries.
ii) Frictional/temporal unemployment:
This is unemployment caused by people moving in between jobs, for example; graduates or people
changing jobs. This type of unemployment refers to a transition period of looking for a new job,
for different reasons, such as: seeking a better job, being fired from a current job, or having
voluntarily quit a current job. The period of time between leaving the current job, and obtaining
a new job is referred to as frictional or temporary unemployment. Frictional unemployment occurs
because of a discrepancy in the timing of leaving one job and starting another job. Imperfect
information about available job opportunities can lengthen the period of someone’s job search.
This type of unemployment is usually seen as voluntary unemployment because people search for
new jobs of their choice. This unemployment allows workers to get the best jobs that meet their
wants and skills. There are two types of frictional unemployment, namely; the wait unemployment
and seasonal unemployment.
• Wait unemployment:
This is one type of frictional unemployment whereby workers will wait to achieve the few high
paying jobs in an economy, this results to what is termed as wait unemployment.
• Seasonal unemployment:
This type of unemployment is a result of seasonal occupations that result from seasons. Some
enterprises provide jobs only during certain seasons and when the season is over they cause
unemployment which is termed as seasonal unemployment. This unemployment affects certain
industries more than others, for example: Catering and leisure, construction, retailing, tourism
and agriculture.
iii) Open unemployment
Open unemployment arises when a person, voluntarily or involuntarily, keeps himself or herself
out of consideration for certain jobs.
iv) Cyclical unemployment or Demand deficient unemployment
This is as a result of the business cycles. Apparently; there is a natural cycle of good economic
times and poor times. This type of unemployment usually occurs when there is an economy-wide,
decline in the aggregate demand for goods and services (poor economic times). Consequently,
employment declines, while unemployment increases correspondingly. It is also referred to as
‘demand deficient unemployment’. For example, during economic recession or slowdown many
workers around the globe lose their jobs. When the aggregate demand falls, investments decline
leading to unemployment. The changes in aggregate demand can be attributed to high tax levels,
under consumption, low government spending and a decline in exports
v) Classical or Real Wage Unemployment
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This unemployment occurs when real wages in a competitive labour market are pushed above the
equilibrium level. It is also known as "disequilibrium" unemployment. These changes in wages
can be caused by adjustments in the minimum wages, or pressure from trade trades unions.
Generally, when wages are raised, the supply of labour will increase and surpass the demand for
labour, thus leading to unemployment.
What is underemployment?
This condition is closely related to, but is different from unemployment. Generally,
underemployment refers to a situation characterized by any of the following aspects; partial
lack of work, low income, underutilization of skills and low productivity. Underemployment is
said to exist when people are working less, either daily, weekly, monthly or seasonally, than
they would like to work. Underemployment can be distinguished into the following two categories,
namely:
i) Disguised underemployment:
This type of under-employment describes the condition of those who work on part time because
full time jobs are unavailable or are employed on a full time basis but the services they render
may actually be much less than full time. For example, a person who spends the whole day
herding only one sheep yet he can manage to take care of a hundred goats, is termed to be
experiencing disguised under employment.
ii) Hidden underemployment
This refers to a situation where people are employed in occupations that require lower levels of
skills than they are qualified for. This mostly happens when people opt for a second choice’
employment primarily because the job opportunities are not available.
What are the causes of unemployment?
• Low and fluctuating levels of economic growth. Such conditions do not generate adequate
employment opportunities, as needed.
• Excessive dependence on agriculture and the slow growth of non-farm activities limit
employment generation.
• Use of capital-intensive methods and production practices. Embracing such techniques dislodges
persons currently employed, and also slows down the generation of new employment
opportunities.
• Lack of a clear and well developed human resource policy or manpower policy. This may lead to
a mismatch between the needed and available skills and training, thus resulting in unemployment,
especially of the youth and educated.
• Rapid growth in population
• Lack of employability due to poor health and nutrition can also lead to unemployment.
• Lack of investment and infrastructure development. Absence of these factors reduces the
generation of adequate levels of employment in the economy, consequently increasing
unemployment.
• Inadequate availability of public employment programmes can also increase unemployment.
• Lack of capital to stimulate economic growth.
• Unfavorable socio-economic and political environment. For example, civil strife and corruption
have immensely contributed to unemployment in the developing countries.

42
• The formal school curriculum in most developing countries tends to mainly prepare learners for
the white collar jobs.
Consequences of unemployment
The consequences of unemployment can be divided into four main broad categories namely:
i) Consequences at the individual or personal level
• Loss of income
• Fall in real living standards
• Increased health risks
- Stress
- Reduction in quality of diet
- Social exclusion because of loss of work and income
• Loss of marketable skills (human capital) and motivation. The longer the duration of
unemployment, the lower the chances of finding fresh employment. This is because, the
unemployed becomes less attractive to potential employers.
ii) Economic Consequences for Businesses
These refer to the consequences of unemployment at the public or national level. They can
either be negative or positive consequences.
Negative consequences
• Fall in demand for goods and services
• Fall in demand for businesses further down the supply chain
• Consider the negative multiplier effects from the closure of a major employer in a town or city
Positive consequences
• Bigger pool of surplus labour is available .However, this can still a problem if there is a lot of
structural unemployment
• Less pressure to pay higher wages
• Less risk of industrial or strike action .The fear of job losses leads to reduced trade union power
iii) Consequences for the Government (Fiscal Policy)
• Increased spending on unemployment benefits and other income –related state welfare payments
• Fall in revenue from income tax and taxes on consumer spending
• Fall in profits – reduction in revenue from corporation tax
• May lead to rise in government borrowing (i.e. a budget deficit)
iv) Consequences for the economy as a whole
• There will be a loss in output (real GDP) from the people who are out of employment or work.
• Labour market failure leading to inefficiency in the allocation of resources
• Some of those unemployed might leave the labour force forever, thus causing a fall in the
potential gross domestic product.
• Can lead to an increase in social inequality, by increasing incidences of poverty
How can governments reduce the unemployment problem?
The following strategies can be adopted by governments to redress the unemployment
problem:
• Lower interest rates (a monetary policy stimulus).This will stimulate increased local investments,
because of the increased volume of money in circulation. Thus leading to an increase in the
demand for more labour
43
• Lower the exchange rate (helps exporters).This will enhance the demand for labour in the export
sector to cater for the high volume of exports.
• Lower direct taxes (fiscal stimulus to spending power).Reduction in taxes will increase
consumption, thus provoking the production of more goods and services. This increase in the
demand for goods and services will create more demand for labour.
• Increased government spending on major capital projects e.g. Infrastructural development will
automatically enhance the demand for more labour.
• Governments can also give incentives to encourage inflows of foreign investment into the
country, to generate more employment.
• Increased spending on education and training including an emphasis on “lifetime-learning”, to
equip people with the relevant skills.
• Improve the flow of information on the available job vacancies
• At national level, planners need to ensure a balance in development of various sectors in the
economy e.g. do not develop education sector at the expense of other sectors.
• Adopt the manpower requirement approach to planning, so to avoid the over- production of skills
which are not in demand.
• Offer a school curriculum need that is relevant to the needs of the labour market.
• Emphasize non-academic education to avoid the problem of the ‘diploma disease.’ Therefore also
reward those without academic certificates.
• More resources should be channeled to the informal sector to help encourage self-employment.
• Strengthen out-of-school education programmes for those with little formal education. This will
help to upgrade their skills and enable them to utilize the available employment opportunities in
the informal sector.

ACCESS, EQUITY AND EFFICIENCY IN EDUCATION

At the end of this topic, you should be able to:
• Discuss the concept and indicators of access in education
• State the measures by Kenya to enhance access
• Discuss the concept and indicators of equity in education
• State the measures by Kenya to enhance equity
• Discuss the concept of efficiency in education
• State the measures by Kenya to enhance efficiency
• Describe and compute the indicators of internal efficiency in education
Concept and indicators of access in education
What is Access to Education?
Access to education, can broadly be defined as the regular attendance and progression by
pupils or students in a given education level or cycle. This implies the ability of a pupil or
student to participate in an academic programme and or use educational resources that are
available to him or her. Therefore, access seeks to answer the following three questions:
• Who are the potential clients for the different education levels? In terms of age and population?
• How many children are not participating in or have been rejected by the education system at their
corresponding education level? Who are they?
• Which factors may explain the insufficient access to education?
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Indicators of Access to Education
The indicators of access are the measures that are commonly used to assess the status and
problems of access in the different levels of education. There are three main indicators of access
to education namely: Enrolment ratios, the Non-Schooling Gap and transition rates from one cycle
or level of education to another
a) Enrolment Ratios
Refers to the percentage or fraction obtained by dividing the total enrolment in a level or
stage of education by the population of the age group that corresponds to that level or stage. For
example in Kenya, the official age of entry to primary school is 6 years and the course lasts for
8 years. Consequently, a child who enrolls in standard one at 6 years will complete standard
eight at 13 years. From this illustration, the age-group corresponding to the primary school level
is 6-13 years. This implies that all children in the age bracket of 6 years to 13 years ought to be
in primary school. Given that: N = Enrolment, P= Corresponding Population, the enrolment ratio
at the primary school can be expressed as;
Enrolment ratio = N (Primary)
P (6 – 13)
There are two categories of enrolment ratios, namely: Gross enrolment ratio and Net enrolment
ratio.
i) Gross Enrolment Ratio
This ratio does not take into account the ages of the pupils or students enrolled in a given level
or grade of the educational system. For example, at the primary school level, this ratio can be
expressed as follows: Gross enrolment ratio = N (Primary)
P (6-13)
Example:
The number of pupils enrolled in the primary school level in Paradise County is 320,000. Out
of this enrolment, 300,000 pupils fall in the age bracket 6-13years. Use this information to
calculate the pupils’ gross enrolment ratio in Paradise County. N = 320,000 while P = 300,000
Gross enrolment ratio = 320,000 = 1.067 or 106.7%
300,000
ii) Net Enrolment Ratio
This ratio takes into account the ages of the pupils/students enrolled in a given level or grade of
the educational system. For example, at the primary school level the ratio can be expressed as
follows: Net enrolment ratio = N ( 6-13)
P (6-13)
Example:
The total population of children with the primary school going age in Kajiado County is 150,000.
However, of this population only 100,000 pupils are enrolled in the primary schools in the
County. Calculate the pupils’ net enrolment ratio in Kajiado County.
N = 100,000 while P = 150,000
Net Enrolment Ratio = 100,000 = 0.667 or 66.7%
150,000
b) Non- Schooling Gap

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This is the difference between the estimated population of the appropriate age group and the
number enrolled in the education level corresponding to that group. For example at the primary
school level, the non-schooling can be expressed as follows;
Non-Schooling Gap = P (6-13) – N (6-13)
Example:
The total population of children with the primary school going age in Kajiado County is 150,000.
However, of this population only 100,000 pupils are enrolled in the primary schools in the
County. What is the non-schooling gap in Kajiado County?
P (6-13) = 150,000 and N (6-13) =100,000
Non-schooling gap = 150,000 -100,000 = 50,000
c) Transition Rate
This is the proportion of pupils/students in the final grade of an education cycle in a given
year (t), who proceed to the next education cycle in the subsequent year (t+1).
Transition rate = Enrolmentinthenextcycle in thesubsequentyear ( t+1) X 100
Enrolment in final grade of the preceding cycle in year t
Example
In 2014, two hundred and eighty thousand (280,000) pupils sat for the KCPE examination in the
Kakamega County. However, only two hundred thousand (200,000) pupils secured admission to
form one in the subsequent year (2015). Calculate the transition rate of pupils from the primary
education cycle to the secondary education cycle in Kakamega County in 2014.
Transition rate = Enrolmentinnextcycle inthe subsequentyear(t+1)X100
Enrolment in final grade of the preceding cycle in year t
Transition rate = 200,000 X100= 71.43%
280,000
Factors Affecting Access to Education
• Long distances between the school and the homes of the children. Many prospective pupils fail
to attend school because of the distance factor. This factor is very much affects the enrolment of
female children in rural area and the arid and semi-arid lands (ASALs).
• The direct costs of formal education. Educational costs such as tuition fees, purchase of uniforms
and other school charges or fees form a barrier that prevents the children from poor homes from
enrolling in school.
• The School Calendar. The daily activities and or the annual school calendar can pose an
impediment to access, especially if they coincide with certain activities of the population that is
supposed to be served. If the school calendar coincides with community activities such as;
sowing, weeding, harvesting or the migration patterns in search for pasture in the ASALs, access
to education can be immensely compromised.
• The high opportunity cost of attending school. Opportunity cost as a factor mainly affects the
poor families. In a poor family, if a child attends school; the family loses a substantial amount
of supplementary income that would otherwise be earned by the child.
• Customs, Values and Traditions. In some communities, the cultural practices, values and the
traditions observed are a hindrance to accessing education. In such communities, keeping
children (girls) in school beyond a certain age could be a taboo.

46
• Irrelevance of the school curriculum. At times families or communities will only enroll their
children in school if they feel the education that is being offered is relevant to their needs. On the
other hand they will not enroll if they consider it to be otherwise.
Measures by Kenya to Enhance Access in Education
a) Access to Early Childhood Development and Education (ECDE)
i) Establishment of the National Centre for Early Childhood Education (NACECE) and the
District Centres for Early Childhood Education (DICECE) for purposes of in servicing
teachers and training of trainers
ii)Mobilizing communities and parents through awareness creation
iii) Provision of community support grants to support marginalized and vulnerable communities
iv) There is a gradual integration of the 4-5 year old children into the primary education cycle
iv) There is intensified capacity building and resource mobilization with a view to empower
stakeholders to manage their Early Childhood Development and Education (ECDE)
facilities efficiently.
v)There are plans to develop a legal framework for the ECDE policy
vi) Plans are underway to develop a scheme of service for ECDE teachers.
b) Access to Primary Education
i) Introduction and provision of Free Primary Education (FPE)
ii)The government through the Ministry of Basic Education has initiated a school mapping
exercise with a view to determine the ideal location of new schools.
iii) Mobilization of resources from development partners in support of FPE
iv) Provision of low cost boarding schools in ASALs
v)Introduction of the school feeding programme especially in ASALs
vi) Enactment of the Children’s Act 2001, Cap586; in this Act every Kenyan child is entitled to
education
vii) The provision of mobile schools in ASALs
c) Access to Secondary Education
The low student enrolment in Kenyan secondary schools has mainly been attributable to;
inadequate number of secondary schools, the high cost of boarding schools, learning resources,
teaching materials, transport and development levies among others. In an effort to enhance access
to secondary schools, the government has put in place a number of measures, namely:
i) The curriculum has been rationalized and revised so as to reduce the workload and the associated
costs.
ii)The introduction of tuition waivers in all public secondary schools as a way of reducing the cost
of education especially for the poor families
iii) There is a drive towards the development of day schools; these schools are comparatively
cheaper, consequently more students are likely to enroll.
iv) The government has established a bursary scheme for poor students in secondary schools.
v)The government has put in place school fees guidelines and ceilings for the different
categories of public secondary schools
vi) The government supports the development of boarding schools especially in ASALs to cater
for the girl child and also counter the effect of the long distance to school
vii) The government has set up 30 additional national schools around the country
Concept and Indicators of Equity in Education
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What is Equity in Education?
Equity refers to the assurance that all pupils or students will receive impartial treatment and access
to all programmes, resources and curriculum irrespective of their ethnicity, race, gender, socio-
economic status or any other distinguishing characteristic or equity can also be referred to as the
state or action or principle of treating pupils/students in accordance to their differential needs.
In this regard, fairness is the basis/justification for government intervention. The f o c u s o f
eq u ity i s o n ; n e e d s , d i f f e r e n c e s , a n d d if f e r en t ia l allocation based on a rational process.
An education system is considered to be equitable if it accords each student fair treatment.
That is, the differences that may exist between students with regard to the levels or types of
education they receive are solely due to the factors that the students themselves can control or are
responsible for. However, if the differences are a function of factors beyond the individual’s
control such as; sex, ethnicity, socio-economic status or place of birth among others, then the
education system is inequitable.
What are the different types of equity?
i) Horizontal equity
This refers to the equal treatment of equals. It assumes that all individual are equal and must
therefore be treated equally with regard to the allocation of educational resources. This
precept seems to be logic behind the uniform allocation of subsidies by the government of
Kenya to pupils and students in public primary and public secondary schools respectively.
However, this notion is rather idealistic given that no two regions or people are ever the same.
Therefore, treating different regions or people alike may be biased against those who are
already at a disadvantage.
ii) Vertical equity
This refers to the unequal treatment of unequals. This notion argues that people are never
equal in all ways and must therefore be treated differently when it comes to the allocation of
resources. This possibly explains why the Higher Education Loans Board (HELB) in Kenya
allocates loans to students on the basis of information about their socio-economic background.
Considering equity from this standpoint is quite rational, though, it poses a number of demerits.
One example of the demerits is the current system that is being used to select Kenya Certificate
of Primary Education (KCPE) graduates, to join form one in public secondary schools in Kenya.
The present day form one selection criterion tends to favor pupils from public primary schools
against those from private primary schools. The assumption in this case is that, pupils in public
primary schools are generally from poor families, while those in private primary schools are
from the well to do families. As a consequence of this mode of selection, many pupils with very
high passes in KCPE from private primary schools have failed to secure form one places
in national secondary schools and good performing county secondary schools.
iii) Intergenerational equity
The classification of equity on this basis, seeks to ensure that inequalities in one generation are
not perpetuated to the next generation. It is important to note that, the mode of financing
public education can immensely help to redress intergenerational inequalities. The introduction
of tuition waivers and education subsidies in the provision of public education in Kenya are
good examples of government efforts to eliminate the existing intergenerational inequalities.
For sure, if education were offered at the market price, only the well to do would remain in
school, as the poor become outcasts of the education system.
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What is the significance of equity in education?
Embracing equity in education is important for the following three main reasons;
a) To enhance social justice
Education leads to empowerment. People who are empowered speak for their rights more
boldly. For example, by educating the girl child, the girl is empowered to participate more in
social and political activities. Consequently, she attains greater autonomy in both the public and
private spheres.
b) To limit transmission of inequalities from one generation to the next.
Education is the main channel through which inequalities are handed down from one
generation to another. However, if an education system offers everyone equal educational
opportunities, then it can break the vicious circle of poverty and other disadvantages at the
individual level.
c) To enhance a nation’s economic productivity
If resources are optimally allocated to education, investment in people will be equitable. As a
result, the returns to education as an investment will be higher and this will lead to the
increased economic productivity and growth of a country.
Causes of inequity in education
Inequities to educational opportunities can be mainly attributed to the following factors.
i) Educational costs
It is important to note that the cost of schooling a child is not the same for every family.
Consequently, when the cost of education is high, the chances of a child from a poor family
going to school or gaining access to quality education and reaching a high academic level are
much smaller than those of a child from a wealthier family. On the whole, poor families have a
lower demand for education than the well to do families. This scenario can only be reversed if
governments step in to subsidize public education.
ii) Cultural and Social Obstacles
At times culture poses a serious impediment to schooling. For example, in some communities
especially in the developing countries, the traditional role of a girl child as a helper in domestic
chores is still critical. Besides this, early marriages are still practiced. As a consequence of the
foregoing, the girl child tends to drop out of school at a very tender age in such communities. In
some cultures, it is also believed that investing in a girl is not worthwhile because she will move
away with her husband, unlike the boy child who will remain in the home.
iii) Poor Geographical distribution of education expenditures
The uneven distribution of infrastructure and public spending on education is often a major source
of inequity. Because of historical reasons and other factors, educational resources have often been
concentrated in certain regions, cities and urban areas among others at the expense of other
regions. As a result of this, marked inequalities tend to exist between the children of the well-
endowed regions and those of deprived areas. For example, the endowed areas tend to enjoy
the following conditions unlike the deprived areas: many schools, short distances to school, well
equipped school, are well staffed with teachers and optimal class sizes.
iv) Disagreement with the Requirements and Expectations of Parents
One cause of disagreement with the parents is the way schooling is organized. If the education
system is run in such a way that the school time-table and annual calendar is not in harmony
with the occupations (agriculture) of families; the affected families may withhold their children
49
from attending school. Secondly, the way some activities such as; teaching (teaching methods)
and punishment (corporal punishment) are conducted in school can prompt parents to keep
their children away from school. In addition, lack of specific infrastructure, such as separate
boys and girls latrines can also be a disincentive to some parents, especially with regard to the
disabled children.
v) Irrelevant and Inappropriate Content
Many at times, the content of the curricula offered in school and the examples provided in
textbooks are not relevant and sensitive to the individual differences of the pupils/students. For
example, there are many cases where curricula offered and the examination system in place is
still a reflection of the former colonial governments. Such curricula tend to be highly academic
to the total disregard of the needs of those pupils/students who will not go beyond primary school
or secondary school education. As a result of this, inequalities are cultivated in the education
system. At times the examples provided in textbooks advantage some areas over others and
convey stereotypes of the social role of men and women within the family and society (with
women portrayed as home keepers to care for the family and rear children; while men are
portrayed as professional in the modern economy).In such cases the girl child is prejudiced and
may not aspire for highly professional careers.
vi) Unequal allocation of the education budget
In most countries, the public education resources are concentrated at the higher education
levels. This action tends to favour students from well to do families because they are the ones
who are majority at these levels. Consequently, the gap between the poor and the well to do
families continues to widen. However, if a decision is made to heavily fund basic education than
those in the population who are hardest to enroll in school will definitely benefit from the
allocated resources.
Indicators of Equity
Indicators of equity are measures that are commonly used to assess the status and problems of
equity in the different levels of education. The commonly used measures of equity are; Gender
parity index and the gini- coefficient.
a) Gender Parity Index
This is an indicator that measures the proportion of female to male students enrolled in the
education/school system in a given year.
Gender Parity Index (GPI) = Enrolment of female students
Enrolment of male students
Example
The enrolment of female students in public secondary schools in Kakamega County in the year
2014 is 25,000 while that of male students is 32,000. Use this information to calculate the
gender parity index in the public secondary schools in the County in 2014.
GPI= 25,000 = 0.781
32,000
The above index implies that for every 1000 male students enrolled in public secondary schools
in the county, there are 781 female students.
b) Gini coefficient
This is a ratio or indicator that measures inequalities in income distribution among people in a
given area. The gini-coefficient value lies between 0 and 1.The value of 0 indicates perfect or
50
equitable distribution of resources, while a coefficient of 1 implies that there is imperfect or
inequitable income distribution.
Measures taken by Kenya to enhance equity in education
i) All the government development plans address the education sector and equity for that matter.
For example, the African Socialism addressed the education sector in 1965.
ii) The Kamunge Report (1988) recommended the abolition of classification of schools along
all other basis other than public and private.
iii) The introduction the quota system of admission to educational institutions so as to give a
chance to the disadvantaged .For example, the admissions to national and county schools.
iv) The introduction of the higher education loan scheme by the government to cater for the
academically bright from poor families
v) The affirmative action in the admission of female students to university
vi) The introduction of Free Primary Education and secondary tuition waiver (subsidized
secondary education)
vii) The adoption of a centrally planned curriculum and same exam certification.
viii) Introduction of different types of educational institutions to cater for students with varied
abilities and needs. For example; vocational institutions, village polytechnics, technical
institutions among others
ix) Initiating campaigns against retrogressive cultural practices such early marriages and female
genital mutilation (FGM)
x) Empowering parents & community leaders on how to monitor the use of school resources
xi) Promulgation of the new constitution is a major boost to equity initiatives. In the new
constitution, education is a basic right and everyone is entitled to receive it.
xii) Payment of examination fees at primary and secondary level
xiii) The education Act 2012 which provide for legal measures of parents who fail to take their
children to school
Concept of Efficiency in Education
What is efficiency?
Efficiency is the term used to describe the relationship between inputs and outputs or
outcomes. A system is said to be efficient if a maximum output or outcome is obtained from
a given input, or if a given output or outcome is obtained with a minimum input.
What are the inputs of an education system?
Main inputs
Students, teachers
Books, equipment, time
Curriculum, Transport
Recreational facilities
Food, Furniture
Other inputs
Teacher student ratio, teacher qualifications
Educational expenditure, Neighborhood
Peer group effect, innate ability
Observable attributes
The difference between an Educational Output and Outcome
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i) Educational Output
An output is defined in terms of the achievement of pupils or students with regard to;
Knowledge, skills, behavior and attitudes as measured by tests and examination results among
others. An output is a direct function of an activity. That is, it is directly linked to a specific
learning activity in education.
ii) Educational Outcome
An outcome is defined in terms of the external effects of an output. That is, it is not directly
linked to a specific learning activity. In essence, an outcome is a short-term & medium term
characteristic that is generally associated with the utilization of an output. Examples of educational
outcomes include: Discipline, punctuality, honesty, good work ethics and being socially and
economically productive in the society among others.
Types of efficiency in education
i) Internal Efficiency
This type of efficiency is concerned with the relationship between inputs and outputs within the
education system or within an individual institution. It basically refers to the ability of the
education system to meet its internally set objectives. The measurement of internal efficiency
can be done through cognitive tests, reading ability and the time taken to reach the exit point. The
quantitative indicators of internal efficiency include; Grade survival rates, grade repeater rates,
grade drop-out rates, grade wastage rates, grade retention rates, graduation rates and the average
number of years per graduate.
ii) External Efficiency
This type of efficiency is judged by the relationship between inputs and outcomes. It refers to
the ability of the education system to meet externally set objectives. It is therefore concerned with
the relevance of knowledge and skills offered in school to the world of work. It asks questions
like; how well does the school prepare the students for their roles in society as indicated by
their employment prospects? How productive is the student in the labour?
iii) Technical efficiency
This is concerned with the quantitative relationship between inputs and outputs and is basically
concerned with making the best use of each given input in the education process. If more
inputs are used to produce less output, then the production process is technically inefficient.
iv) Economic efficiency
This is concerned with the relationship between educational outputs and the cost of the inputs.
The purpose is to minimize the costs of education and maximize the benefits. If more output is
produced with minimum cost, then the system is said to be economically efficient. The aim of
economic efficiency is to know whether an institution is operating optimally or not in terms of
the cost of the inputs.
iii) Allocative efficiency
This refers to choosing the most efficient mix of inputs for the different levels and types of
education. The focus is on the efficient allocation of different resources in the education
process, to the different types and levels of education, such that there is a balance in the way
resources are utilized.
At times internal efficiency and external efficiency of an education system may be
in conflict. For example, an education system may have high graduation rates (internally

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efficient), yet its graduates are poorly equipped for the world of work (externally
inefficient).
Causes of inefficiency in education
i) Poor utilization of teachers in schools. This is because; in some areas teachers are while others
they are under-worked.
ii) An imbalance in the staffing of teachers. Most schools in urban areas are overstaffed, but those
in the rural areas are acutely under-staffed. In this case the staff imbalance is a source of
inefficiency in both cases.
iii) At times academic programmes take unnecessarily long to complete at the tertiary level. Ideally
most of these programmes can be reviewed to take a shorter period.
iv) An overloaded school curriculum. A heavy workload makes it difficult for a student to learn.
v) Poor utilization of physical facilities, especially if the institutions are under-enrolled, over-
enrolled or remains idle for long periods of time during vacations.
vi) High wastage rates due to dropouts and repeaters as a result of poverty, sickness,
malnutrition and culture.
vii) Offering courses that do not provide the skills needed in the market.
viii) Poor management of educational institutions. Most managers of educational institutions have
not been trained in management and good governance. Consequently, they waste a lot of
resources because of mismanagement.
ix) Political interference with regard to the management of educational institutions. Quite
often, the managers of educational institutions are not appointed on merit, but on the basis of
political connections.
x) Occasionally the government policies that support equity tend to contradict efficiency.
xi) Excessive bureaucracy in government with regard to the way educational issues are handled. At
times issues that simply require an immediate response have to go through the full cycle of a
special committee or taskforce before any action is taken.
Measures by Kenya to enhance efficiency in education
i) The government has put in place guidelines on how to optimally engage the services of teachers
in schools
ii) The government policy is to ensure that schools are optimally Enrolled
iii) The government policy is to encourage schools to have more streams of classes. Academic
institutions have ensured maximum utilization of their infrastructure. Consequently,
academic programs are run even during weekends and holidays.
iv) The government is greatly supporting the initiative of establishing more day secondary schools.
v) The government has put in place school fees guidelines to protect parents from
exploitation by school managements
vi) The government has established bursary and loan schemes to support the education of children
from poor families
vii) The government is hiring teachers annually to mitigate the teacher shortage crisis
viii) The government has been regularly reviewing the school curriculum with a view to make the
curriculum more in line with the market needs.
ix) The government is steadily making efforts to integrate information communication technology
(ICT) in the public schools, in preparation for the introduction of e-learning in schools.

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x) Academic institutions are gradually adopting the use of modules in instruction so as to minimize
on the time needed for the direct face to face sessions.
Indicators of internal efficiency in education
In this section, we shall discuss and compute the indicators of internal efficiency in education.
The indicators include: Grade Survival Rates, Grade Repeater Rates, Grade Dropout Rates,
Grade Wastage Rates, Crude Cohort Wastage Rates, Grade Retention Rates, Graduation Rates
and Average number of years per graduate
These above indices will be calculated using the values provided in figure 6.1. Each box in
figure 6.1 below has two different values that represent enrolments and repeaters. The value at
the top in the box represents the student enrolment, while the value at the bottom in the box
represents the students who are repeating the class or grade.
Ways of Evaluating Internal Efficiency
Done by establishing the rate at which students are flowing through the system.
Flow of secondary school students in a country between 1986 & 1989 by grade:
Year 1 2 3 4 Graduates
1986 120000 110000 102000 120000 84000
6000 5500 5200 10500
1987 126000 117000 104000 114000 81000
7500 5900 5300 11500
1988 147000 122000 112000 116000 90000
7900 6100 5600 12500
152000 141000 118000 110000 100000
1989
8200 7000 6000 13000

The table shall be used to work out the flow rates in the country in question.
Indices used are:
i) Grade Survival Rate
• To establish the extent to which students move between successive grades in a system.
• Dividing total number of f students enrolled in a subsequent grade & subsequent grade & subsequent
year by number enrolled in previous grade previous year.
• The GSR is the number of students who moved into the subsequent grade in the
subsequent year, divided by the total enrolment in the previous year. The GSR can
either be crude or actual. The crude GSR does not take care of repeaters. The crude
GSR can only be used if data on repeaters is not available. The actual grade survival rate
is obtained after determining the actual survivors into the subsequent grade in the
subsequent year.
• Survivors are t h o s e s t u d e n t s who progressed to the subsequent grade in the
subsequent y e a r . This n u m b e r c a n b e calcu lated b y subtracting the number of
repeaters in the subsequent grade in the subsequent year from the student enrolment
in the grade.
N tk++11
a) Crude GSR= , where: N = enrolment, k = class/form/grade and t = year
N tk
Repeaters not captured
N tk++11 − Rtk++11
b) Actual GSR =
N tk
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Example:
CGSR between FM 1 & 2 in 1986 = 117000 = 0.975 = 97.5%
120000
AGSR between FM 1 & 2 in 1986 = 117000 – 5900 = 0.93 = 93%
120000

ii) Grade Repeater Rate (GRR)

The GRR is the number of repeaters in the same grade in the subsequent year divided by the
enrolment in the same grade in the previous year. Grade repeater rates can be calculated for
all grades in the specified years. Grade repeaters; refer to the number of students doing the
same grade in the subsequent year.
Rk
GRR =
N tk
GRR in FM 1 in 1986
= 7500 = 0.063
120000
iii) Graduation Rate (GR)
Population of learners in final grade who were able to proceed to the next level of education of
enter labour market. For a 4 year course – sec
G k +3
GR = tk++33
N t +3
GR in 1988 = 90000 = 0.776 = 78%
116000
iv) Grade Drop-Out Rate (GDR)
Generally there is no direct information (Statistics) on dropouts. Dropouts in most cases come-
up either voluntarily or are forced. The number of drop-outs can be determined once there is
information on the number of survivors into the subsequent grade in the subsequent year, and
information on the number of repeaters in the same grade in the subsequent year. It is only
possible to calculate the grade drop-out rate once the number of drop-outs has been
determined. Drop-outs are neither repeaters nor survivors in the education system!
The number of student dropouts can be determined through the following steps:
Establish the student enrolment in the previous grade in the previous year
Determine the number of net survivors into the subsequent grade in the subsequent year
Determine the number of repeaters in the same grade in the subsequent year
Calculate the sum of the above two variables, i.e. Net survivors + Repeaters in same grade
Drop-outs = (Enrolment in previous grade in previous year) - (Net survivors + Repeaters)
Grade Dropout Rate = Drop-outs in subsequent year
Enrolment Previous Grade in previous year
Figure we cannot account for after deducting those promoted and the repeaters.
N tk − ( N tk++11 − Rtk++21 ) + Rtk+1 ) 
GDR =
N tk
GDR between FM 1 & 2 in 1986
GDR = 120000 – [(117000 – 5900) + 7500]
120000
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 = 120000 – 118600 = 0.012 ≈1.2 %
120000
If GDR is constant or rising then the level of education is said to be internally inefficient
v) Grade Wastage Rate (GWR)
It refers to the dual problem of repeating & dropping out of from an education system.
Wastage refers to the number of all those students who fail to proceed to the subsequent
grade in the subsequent year. That is, wastage includes both the repeaters and dropouts.
To determine the student wastage you must do the following:
- Establish the total student enrolment in the previous grade in the previous year
- Determine the net student survivors into the subsequent grade in the subsequent year
Wastage = Enrolment in previous grade – Net survivors into the subsequent
grade

Grade Wastage Rate (GWR) = Wastage fromprevious grade

Enrolment in the previous grade, the previous year
k +1
N t − N t +1
k
Crude GWR =
N tk
CGWR between F1 &2 in 1986
= 120000 - 117000
120000
= 3000 = 0.025
120000
N tk − ( N tk++11 − Rtk++21 )
Actual GWR =
N tk
= 120000 – (117000 - 5900) = 0.074
120000
vi) Grade Retention Rate
It is the opposite of drop-out rate. Add survivors in a subsequent grade in a subsequent year and the repeaters of the
same grade in the subsequent year & divide by enrolment in the previous grade in the previous year.
Retention refers to all those students who remain in the education system. This can be determined
by adding the number of survivors into the subsequent grade in the subsequent year, to the
number of repeaters in the previous or same grade in the subsequent year.
Retention = Survivors to next Grade in subsequent year + Repeaters in previous Grade,
subsequent year
It is a horizontal movement that involves a horizontal relationship .It therefore refers to the
students who pass their terminal examination in a particular year, divided by the total
enrolment in the final form/grade in that same year.
Grade Retention Rate = Retention
Enrolment in previous grade in previous year

GRR =
(N k +1
t +1 − Rtk++21 ) + Rtk+1
N tk
GRR between FM 2 & 3 in 1987
= (112000 - 5600) + 6100
117000

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 = 112500 = 0.962
117000
Many pupils do not complete the primary level of education. A number of measures in Kenya have
been suggested to address the issue & thus enhance survival (retention) rate between primary &
secondary levels of education. These are:
• Grass root campaigns to positively change people’s attitudes towards education.
• Provide tuition for Free Primary Education.
• Reform curriculum to be learner friendly
• School feeding programmes in Arid & Semi. Arid Lands (ASAL)
• Out – of- school programmes in areas occupied by nomadic communities.
• Enactment of children’s Bill – outlaws child labour.
vii) Cohort Wastage Rate (CWR)
Cohort – a group of people with similar identifiable characteristics.
Measures the loss that occurs between the entry point & the exit point in a particular level of an education system.
A cohort is a group of people or students with similar identifiable characteristics. For example,
students who enroll in class in the same year constitute a cohort. The cohort wastage rate measures
the loss of students that occurs between the entry point and the exit point in a particular level of
an education system. To determine the cohort wastage rate you must do the following:
- Establish the total student enrolment in the entry grade.
- Determine the net student survivors into exit grade in the final year
Wastage = Enrolment in entry grade – Net survivors into exit grade in the final year
Crude cohort wastage rate (CCWR) = Wastagefromthe cohort
Enrolment in the entry grade
N tk − ( N tk++33 − Rtk++43 )
Crude CWR =
N tk
CCWR of Form 1 in 1986
=120000 – (110000 - 13000) = 0.192
120000
CCWR not a reliable measure since it is not easy to know the number of repeaters from the entry point to
the exit point Actual CWR is complex.
viii) Average Years per Graduate (AYPG)
Obtained by adding total enrolment in each of the grades as a cohort moves from the entry point to the exit point and
divide by number of graduates from that cohort.
Repeating and dropping out are common phenomena in an education system, and this affects
the average number of years per graduate. The average years per graduate is the addition of
the total enrolment in each of the grades; from the entry point to the exit point in a cohort,
divided by the total number of graduates from that particular cohort.
N tk + N tk++11 + N tk++22 + N tk++33
AYPG =
Gtk++33
AYPG for the 1986 form 1cohort.
= 120000 + 117000 + 112000 + 110000 = 4.59 ≈ 5 yrs
100000
Resources worth one year were wasted in respect to 1986 Form 1 cohort

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The figure above shows the flow or movement of students in an education cycle over time.
Generally, there are three possibilities that students who enroll in school, will always
encounter. These are:
Progressing to the subsequent class or grade in the subsequent year
This movement is represented by the diagonal and horizontal arrow movement.
Repeating t h e s a m e g r a d e o r c l a s s i n t h e s u b s e q u e n t y e a r
This m o v e m e n t i s represented by the vertical arrow movement.
Dropping out of class or the system all together in the subsequent year
In all calculations:
N= Enrolment
k = class/form/grade
t = year

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