An Evaluation of the Effectiveness of Government Intervention in Education Sector

The issue of government intervention in the education sector is an integral element of considerations of human capital, which itself is a precursor to societal economic growth. On the one hand, it has been argued that increased government intervention allows for greater accessibility and affordability of education which in turn enables it to bear greater positive consumption externalities in the long-run. On the other hand, studies have also pointed out inefficiencies and a lack of development in education which is predominantly government run, causing criticisms of intervention and calls for more free-market based approaches to the education sector. However, the extreme bounds of the degree of intervention has yet to be explored, i.e., the potential of zero government intervention in the education sector. Using microeconomic theory, the case of zero government intervention in the education sector is evaluated on a range of outcomes. Contrary to established economic theory which suggests that subsidies and public schooling can enable education to reach an optimal level of consumption in society which eliminates the dead-weight loss caused by the underconsumption of education, this paper finds that the education sector - primarily public schooling - can be far more efficient with less intervention and moderate governmental oversight in the developed world. However, it also indicates that government intervention is necessary in the developing world to maintain the accessibility of education.