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Price and Real Output Measures for the Education Function of Government Exploratory Estimates for Primary and Secondary Education

Price and Real Output Measures for the Education Function of Government Exploratory Estimates for Primary and Secondary Education

Chapter:
(p.373) 9 Price and Real Output Measures for the Education Function of Government Exploratory Estimates for Primary and Secondary Education
Source:
Price Index Concepts and Measurement
Author(s):
Barbara M. Fraumeni, Marshall Reinsdorf, Brooks B. Robinson, Matthew P. Williams
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226148571.003.0010

This chapter describes the extension of price measurement to the difficult area of government-provided education services. These education services are provided without explicit charge to consumers; their production involves significant nonmarket inputs; the contribution of providers is difficult to isolate; and the benefits of education are complex and difficult to value. The authors develop and compare alternative quality-adjusted and unadjusted measures of the price and real output of the U.S. primary and secondary education services, using three dimensions of quality: teaching staff composition, pupil–teacher ratio, and high-school dropout rate. The use of their preferred method of quality adjustment raises the estimated annual growth rate of real output by 0.18 percent for their entire 1980–2001 period of study. This study is part of the ongoing efforts by the Bureau of Economic Analysis to improve the valuation of government output in the U.S. national accounts.

Keywords:   price measurement, education services, nonmarket inputs, quality adjustment, annual growth rate, government output

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