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PeakTrader said...

Education has a positive effect on income (or GDP), which may help explain why U.S. real per capita GDP increased at a faster rate after WWII.

Also, smoothing-out business cycles, since WWII, likely had a positive effect on real per capita GDP (since resources were utilized more efficiently).

Moreover, the increasing percentage of women in the workfore likely had a positive effect on real per capita GDP. Of course, there are positive and negative factors.

Census Bureau Reports Nearly 6 in 10 Advanced Degree Holders Age 25-29 Are Women
APRIL 20, 2010

"The data also demonstrate the extent to which having such a degree pays off: average earnings in 2008 totaled $83,144 for those with an advanced degree, compared with $58,613 for those with a bachelor's degree only. People whose highest level of attainment was a high school diploma had average earnings of $31,283."

From article:

"It is likely that the causation works both ways: higher GDP per capita means better education (because of more investment in education) and better education means higher GDP."

From (another) article:

"Within the United States, researchers have found that when holding an individual’s own years of schooling constant, that individual’s earnings increase by around 9 percent as the share of college graduates in that individual’s metropolitan area increases by 10 percent.

If you work around skilled people, you earn more, either because you have learned from those people or because more skilled entrepreneurs make production more efficient."

The charts may be further proof that improvements in U.S. living standards were greater during the 2002-07 bubble than the 1995-00 bubble (and in a structural bear market that began in 2000), and real per capita GDP doesn't fully capture the improvements in living standards.

Charts:

http://4.bp.blogspot.com/_otfwl2zc6Qc/TIuXgFk-JfI/AAAAAAAAOX0/d-3kvfmO4OU/s1600/stuloan1.jpg

http://1.bp.blogspot.com/_otfwl2zc6Qc/TIr4k5sF0eI/AAAAAAAAOXU/IslxLrhKk30/s1600/stuloan2.jpg

http://1.bp.blogspot.com/_otfwl2zc6Qc/TIuO-ayCRrI/AAAAAAAAOXs/AS0NJ_lRwE8/s1600/stuloan3.jpg

It seems, when tuition and fees become too high, demand for private expensive schools would fall before demand for public inexpensive schools, given the quality of education is not much different. Yet, that doesn't seem to be the case:

It's expensive, so it must be good
Sep 2nd 2009

Traditional economics would suggest that raising the price of an item (such as a college education) would reduce demand for it. But instead this study found that raising tuition — as well as instructional expenditures — actually improves the demand to attend liberal arts schools and schools in the bottom half of the top 50.

For example, for liberal arts colleges ranked 26th to 50th, a $1,000 increase in tuition and fees was associated with a 12.9-point increase in SAT scores and a 3.5 percent increase in the proportion of top freshmen admitted.

This is because such costs “serve as markers of institutional quality and prestige,” the authors write.

The authors write that price, in this case, is an indicator of quality. Maybe. Alternatively, education at a pricey institution could be a Veblen good, such that an increase in tuition makes the school more desirable as a status symbol.

There is another possibility as well. Price could be functioning as a filtering mechanism, designed to signal to applicants that only a certain kind of student will be able to attend. This could be narrowly construed as an effort at class segregation, but it might also be explainable in a networking sense.

Rich children have rich parents, and rich parents will tend to be able to open doors for family friends. By increasing tuition, schools increase the potential connectedness of the families of attending students. That's a real selling point, and a real reason why demand might increase.

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http://4.bp.blogspot.com/_otfwl2zc6Qc/TIpwKbZW0KI/AAAAAAAAOWs/NFgtbnuJU3Y/s1600/gdp.jpg

https://www.blogger.com/comment.g?blogID=28997633&postID=3124791355385042311

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PeakTrader said...

"When working in Sweden it’s best to get the issue of taxation out of the way immediately because when most people learn about the amount of taxes they will have to pay they are usually put off the country for good!"

Income tax is payable at a rate of between 26% and 35%, then there's the municipality tax in which an individual resides of 22% to 32%, there is also a national income tax which is levied at between 20% and 25%, and on top of that there are a large number of miscellaneous taxes adding up to 20% to 25%. With that out of the way, you can enjoy Sweden's high standard of living."