This paper is a literature review of economic issues in non-public schools and it will mainly use information obtained from nine sources of economic literatures so highlighted in the work cited section. To begin with, this section will look at an overview of the economic subject from a general perspective, followed also by an overview of the non-public educational sector in general; the purpose of this is to give the research more in depth in terms of information about the topic of discussion.
The economic issues in non-public schools that will be discussed include the issue of economies of scale and the issues of demand and supply in non-public schools. The issues will be presented in a manner stemming from the literatures that will be reviewed for this research.
Aristides (2002, 253-263) in his studies described economics as the study of how man tries to utilize the scares resources he has in order to satisfy his unlimited want and there by getting great benefit from limited resources. Resources here is used to mean anything that can be used to satisfy human wants or desire for various things, these resources can be natural resources or artificial resources.
Economists have described the concept of economization as making the best of the scare resources available to get the best benefit out of them. Under the economic system, ownership and management of resources there is free economy system, centrally planned economic system and the mixed economy system. In the free economic system also called the capital system, resources are privately owned by individuals or organizations, and hence there is no government interference. The question of how, when, what, for whom and how much to produce are answered by the investors themselves.
The centrally planned economic systems or the socialist are those whose resources are owned and managed by the government so as to ensure that every citizen benefits from the decision of how much to produce and when. However in practice such economies are rare.
The mixed economy system is one where part of the resources are owned and managed by private entities while others are managed and owned by the government.
In the study and researches conducted by Lipsey and Courant (1996, 45-49) and Friedman (2002, 112-118) they show that there are two different approaches to economics and this includes micro-economics which tackles issues that affect individuals, for example the theory of the firm, price determination and consumer behavior. Macro-economics tackle issues that affect the whole economy like national income and unemployment. In order to look at the economic issues in non-public school the research applies both the macro and micro-economic approaches.
Non-public schools are also known as private or independent schools, to mean that they are neither under the direct control of the local, state or the national governments, thus their operations are not under the direct supervision of state authorities. These schools retain the right to select students who will learn in their institutions and further more their funding come from students' tuition fee rather that from the ex-chequer. Important to note is that these schools admit some students on a scholarship basis depending on their talent, which can include academics, art and sports, such students benefit from the reduced cost of tuition fee.
Most of the non-public schools are dominated by religiously affiliated schools and denominational private schools. These schools are religiously inclined such that they include religious doctrines in their educational curriculum so as to fulfill their faith's beliefs and also the tradition of the learners who come from very religious background. Examples of such as schools include the parochial schools or the Roman Catholics schools, the Anglican Church schools, Uniting church schools and the Presbyterian Church schools.
According to the United States' Department of Education, National Center for Education Statistics, the tuition fees charged in private schools depend upon many other factors such as the location of the institution itself, the other fees charged by similar schools, the income level of the parents in the community they operate in and the financial capability of the institution of learning. The higher tuition fees paid in these schools is reflected on the high income earned by the tutors or lectures in such schools. Moreover this is justified since the schools only hire the best of the best teachers who are in the market; in addition these schools also provide much enriched learning environments coupled with statue of the art computers, libraries and science laboratories, the teacher to student ratio is also maintained at a low level.
Referring to the information in the Good Schools Guide about only seven percent of students that are in the United Kingdom are in private schools, this figure raise the question why these parents opt for the private schools in UK while a good number (93%) still prefer public schools. Among the reasons are; higher educational standards in private schools as compared to the public schools, the educational curriculum is wider unlike the public schools, the institutions are also well endowed with superior facilities, there is a low student-teacher ratio, matters of social class while other families perceive going to these schools as a family tradition.
The fees in these school range from one thousand pounds to seven thousand pounds per term for non-boarding students while those for boarders could be more that nine thousand pounds per term.
The origins of the non-public schools in the United States can be traced back to the nineteenth century when the education sector was largely dominated by public schools that were perceived to be inclined towards the protestants religious ideologies and politics; and as a call to answer this trend, the Roman Catholic parish churches unanimously agreed to establish their own schools that won't be funded by the government where they would cultivate and nurture the doctrines of Catholics to learners coming from catholic backgrounds. The Protestants followed a similar move in the twentieth century and they started establishing their own private learning institutions.
The private schools in America generally get their funding from the tuition fees paid by learners, from financial endowments, loans from financial institution, from voucher or scholarship funds, grants and donations from their religious organizations or private entities. It is however important to that note not all non-public schools in America are owned and operated by religious organizations, since there are private schools owned and operated by private individuals and organizations.
According to a survey conducted in the period of 2007 to 2008, the estimates show that there were more that thirty three thousand both private elementary and secondary schools, with a total student population of more than five million students. These schools had a record of almost four hundred and fifty six million full time equivalent teachers working in these institutions.
Another report released by the Digest of Education Statics in 2008, showed that the average private school tuition is five thousand and forty nine U.S. dollars for elementary school, eight thousand four hundred and twelve U.S. dollars for secondary schools and eight thousand three hundred and two U.S. dollars for combined schools. Important to note is that this tuition weighted by the number of students enrolled in those schools.
Economic issues affecting non-public schools
Economics of scale
Many economics scholarly authors among them Blaug (2007, 347-349).and Lazear (2000, 99-146) have commented that one of the first economic issues that arises when talking about non-public schools is the issue of economics of scale, in economics this is described as the size of production that can either results in advantages or disadvantages. If the scale of production is high then a firm may enjoy economics of scale or the benefits of large scale production, or it could be otherwise. Depending on the number of students that are admitted in non-public schools of which statistics show they are many in the United States as compared those admitted in public schools, these schools can either have economics of scale or diseconomies of scale (Hodge, 1995, 97-105).
Among the economies of scale that a non-public school may have is technical economies; as the students' population increases the school will be able to adapt to more efficient forms of teaching using technology, leading to a reduction in the cost of hiring teachers. Secondly as a school expands it will be able to acquire wider sources of capital more easily and cheaply and this will reduces its' overall cost of operation, this is financial economies.
Non-public school have high performance rate thus are able to attract high student population, this has made it possible for them to employee qualified teachers leading to efficient and quality management, this is managerial economies.
Since non-public schools have a larger financial capability and thus are able to buy learning materials in bulk they enjoy trade discount when making purchases, which reduces their cost of operation.
Due to their nature non-public schools are assumed to be in private business, and due to fact that their performance…