The Economic Impact of Improving Rural & Remote Education
This report documents the differences in educational outcomes between rural, regional & remote Australia and urban Australia. The report then quantifies
the economic impact of these disparities in educational outcomes. By linking education to human capital formation—one of the key components of economic output along with physical capital—we estimate the shortfall in Gross Domestic Product (GDP) due to these differences.
If the human capital gap between urban and non-urban Australia was closed, Australia’s GDP could be increased by 3.3%, or $56 billion.
To put this in perspective, this is larger than the contribution of the entire Australian tourism industry. Put another way, one would need to quadruple the size of the Australian beef industry to achieve the same economic improvement.
Yet these are only the direct effects, on wages, of closing the human capital gap. There are important spillovers in addition to this, such as improvements in physical and mental health and enrichment of communities. We do not speculate about the size of these spillovers, but they are likely to be substantial. Furthermore, there is a multiplier effect throughout the economy from increased productivity and wages which we do not include. Thus, the size of the benefits we identify are in many ways quite conservative.
