We often wonder why people with college degrees earn more and better than those who are without it. The answer is simple and known to many - it’s the education which counts. But what many can't figure out is how a country's education related to that of its economic performance. Knowing this piece of information in regards to how education and training interact with the economy as such will help people to understand why some businesses, workers, and economies flourish while others continue to falter.
What happens when labor supply increases in a sector where education isn't a necessity?
Understand that as labor supply numbers go up, that much pressure is also put on the wage rate being given out if the demand for labor by the employers is not able to adequately keep up with the incoming supply of labor. The wage rate will collapse, and this will affect the employees who work in those industries that have been low barriers in regards to new employee entry. This means that they don't need higher education or any form of training.
What happens when labor supply increases in a sector where education is a necessity?
Industries that come with high requirements in regards to education and training tend to pay their workers better wages and also provide additional benefits. This is because even if there is labor increase, it's still a small labor pool to choose from when compared to new labor forces and as such employing those which can operate these industries will incur costs.
How Education Benefits a Country's Economy?
Education is an important part of building an economy. As seen by a micro-level example above, globalization, as well as international trade, requires various countries to compete and so the economically well off countries hold an advantage over other economies even though a single country very rarely specializes in just one particular industry. This leads one to naturally assume that the economy of the country will also be full of various types of industries which come with several types of advantages as well as disadvantages in the world market. Thus, education and training of the workers of a country will play a massive factor in ultimately determining just how well the economy of the country will perform.
It should be kept in mind that a thriving economy has a competent workforce, which is capable of operating industries at a certain level where it can gain an advantageous band over other economies.