Productivity and economic output of the education sector

The paper constructs a direct output measure of the education sector for Canada and uses the measure to examine its productivity performance. It makes an explicit quality adjustment of the output of the education sector by proposing and implementing a hedonic approach. The approach represents a practical approach for the quality adjustment in education output and can be applied using the existing data from statistical agencies. The measurement of education output in the paper is predicated on the notion that the output of the education sector represents investment in human capital and it has two variants. The income-based approach measures investment in education as increments in the future stream of earnings arising from education. The cost-based approach measures investment as total expenditures related to education.