Measuring the Economic Output of the Education Sector in the ...

age will achieve the lifetime income of individuals enrolled in grade 7 who are 13 years of age,
with a one-year lag. Investment in human capital for 14-year-olds is estimated as the following:
t t t
s,1,14 s,1,14 s,1,13 s,13,14
I h h (1 g) / (1 r) sr .
(7)
In general, investment in education for students enrolled in education level 1 who are of age a
(6 a
14 ) can be estimated as the following:
t t t
s,1, a s,1, a s,1, a1 s, a1,
a
I h h (1 g) / (1 r) sr .
(8)
Data on expenditures by education level
Student enrolments are disaggregated by education level in order to construct the cost-based
estimates of education services. The cost of education includes labour costs (salaries of
teachers), capital costs, and intermediate inputs. 5
Data are obtained from the Canadian Input-Output Tables for three levels of education: primary
and secondary education, college education, and university education.
Data on the costs of education are not available at individual education levels before 1997. It is
assumed that the relative differences in unit costs across three education levels did not change
for the period before 1997 and are set to be equal to those in year 1997.
2.4 Estimates of the output of the education sector
This section first presents the income-based estimate and the cost-based estimate of the output
of the education sector. It then compares the two estimates.
The income-based estimate of education output
Chart 1 plots trends in school enrolments by education level over the period from 1976 to 2005.
Enrolment in primary and secondary education fell from 1976 to the mid-1980s as the baby
boomers left the primary and secondary education sectors. Enrolment in grades 1−8 then
gradually increased after the mid-1980s and fell again after the mid-1990s as the school-aged
population declined. Enrolment in secondary school (grades 9 to 13) increased after the mid-
1980s and levelled off after the mid-1990s.
5. Capital cost in the education sector is restricted to capital consumption in the National Accounts and does not
include a return to capital.
Economic Analysis Research Paper Series - 16 - Statistics Canada – Catalogue no.11F0027M, no. 080