Quantitative Approaches for Exploring the Influence of Education as Positional Good for Economic Outcomes

Abstract

Education is one of the most important drivers for development and wellbeing both at the level of the society and at an individual level. Recognising the key role of education for social development, economic growth and individual wellbeing, education expansion has become an important objective for educational systems across the world. Education influences distribution of economic outcomes, making people pursue more education in order to obtain higher rewards. While expansion of education accelerates, new theories treat education as a positional good. From this perspective, due to its positional character, returns to education are affected in situations of skills imbalances characterised by a supply of graduates that surpasses the demand of the labour market. This paper employs this new perspective and explores the influence of education on economic outcomes in Romania. The authors present and discuss the use of traditional and new quantitative methods in order to shed light on the positional character of education. Our findings show that, in the case of Romania, the expansion of education did not reach the point at which education can be considered a positional good. The application of such methods is useful to inform a data-driven governance system targeting a better match between the supply and demand for education and skills.