Developing countries fall into captivity underdeveloped institutions, polarized groups and a low level of education. William Russell Easterly in his book The Elusive Quest for Growth. Economists' Adventures and Misadventures in the Tropics "established the relationship between incentives for people and economic growth, it turned out to be direct.

Today I want to write about incentives for teaching education, creating an effective institutional educational environment and the impact these processes have on economic growth and enrichment of people.

A low level of education creates a poverty trap

Even in developed countries, the relationship between education, parents' income and education, and income of children is noticeable. As a rule, the middle class invests in human capital, children receive quality education and receive a lucky ticket along with a diploma - a highly paid job.

In developing countries, even when qualitative education is received, the difference in the salary of a specialist from a developed country is simply horrifying. Low incomes in developing countries kill incentives to invest in human capital. What is the point of sitting behind textbooks, if it is impossible to get a return on your efforts?

But in developed countries, whole groups of the population are also trapped in poverty and poor quality of education. After all, you can get income from investment in education, besides there are many programs for those who want to change their lives.

What's the matter?

According to William Easterly, the problem is creating a match. Each person is a carrier of culture, a conformist transmission, while in a particular group, cuts off all differences from it. So the middle class settles in some quarters, and the poor in others. They have different cultural life, leisure, attitude to education.

If the middle class, as a rule, regards investments in human capital as an absolute value and in its environment it is not accepted uneducated, then in poor neighborhoods it is not the meaning of life. On the contrary, if a child from the poor quarter begins to pursue knowledge, according to Gopnik, he is a botanist and subjected to humiliation, displacement from the environment.

It is precisely the solution of the problem of correspondences in developed countries and the change in the institutional environment in developing countries to create incentives for education that can form a movement towards improving people's well-being, increasing their purchasing power and economic growth.

How to create incentives for investment in human capital

In Russia, as in most authoritarian countries, the state creeps into those functions where it is extremely inefficient. For example, school education was first financed from municipal budgets, now from regional, but in all cases - it was transfers from the federal budget.

Control over the expenditure of funds is assigned to the Control and Revision Office (KRU), and the quality control of education - to the Ministry of Education, which permeates all regions with its hierarchical structure. It is these structures through school principals that influence the quality of the learning process.

All participants are interested in beautiful reports to their bosses. KRU writes that money is spent without violations very effectively, district and regional branches of the Ministry of Education tell in reports about the overfulfilment of the plan for good and excellent assessments. Directors need good grades of students, which can only be achieved by reducing the requirements for students.

Teacher salaries are lower than in other sectors, they create incentives for work in school for those who have nowhere to go. There is virtually no competition between the teachers: everyone gets about the same payment for their efforts. There are simply no incentives for improving the educational process.

The paradox is that the state finances education and checks the effectiveness of spending. The customer and the executor in one person is the direct way to the ineffectiveness of education.Who is interested in the education of children? Only parents!

They need to sneak a financial burden from the back, but this can only be achieved through investing in their own children. More qualitative education, no matter who said anything, no one needs.
But after all, parents at such organization of the education and financing system do not control either the quality of education or the effectiveness of spending.

The only way to remedy this situation is to create trusteeship councils that will hire school principals and teachers. Only then will teachers compete for the effectiveness of the educational process, and financial resources will be spent rationally.

The customer in this case will be parents, executors competing in the educational market of the teacher, and the state will finance the process.

Creation of market educational services in higher education

When I watch news about the affairs of Russian universities, I have a firm impression that they exist solely to plunder budget money, and not for the education of students. It is necessary that universities are transparent and publish financial statements every year, this will at least reduce financial abuse.

According to Sergei Guriev (Myths of Economics), Russia still made the first step toward higher education, the mechanism "money goes for students" is launched, but this is not enough.

The only beneficiary of the benefits from quality education are students, only through them can you launch incentives for effective higher education.

Currently, the federal budget finances universities, the state appoints rectors and supervises the work of higher education institutions. Again, as in the case of a school education, the customer coincides with the performer, and incentives for quality higher education are lost. Instead, incentives remain for inefficient use of public funds - taxpayer money.

To expand the situation and create incentives for effective education, it is easiest to launch a market mechanism through paid education, so that students with money go for modern curricula, necessary specialties in the economy.

Then higher education institutions will focus on the money and interests of students. The task of the state is to provide young people with affordable student loans so that talented people, regardless of their financial situation, can receive higher education.

The effectiveness of higher education becomes visible only over a large period of time, in this regard, the work of the rector and teachers can be controlled exclusively through the board of trustees, but not by means of a government official.

These factors - paid education, affordable student loans, the creation of trusteeship councils spreads the customers of educational services and their executors to the parties, thereby launching market relations in higher education. This is the only way to create an effective institutional environment for successful investment in human capital.