Supply and amount demanded are equated not by a price-adjusting market mechanism but rather institutionally, largely by the state.The social benefits of education (the payoff to society as a whole) for all levels of schooling fall short of the private benefits (see Table 8.1)
Governments and formal-sector private employers many developing to countries tend to reinforce this trend by educational certification-contin filled by less educated workers. Excess educational requirements for jobs previously the ously upgraded formal educational entry qualification becomes f malized and may resist downward adjustment. Moreover, t the extent that trade unions succeed in binding going wages to the educational attainments of jobholders, the going wage f each job will tend to rise (even though worker productivity in that job does not significantly increase). Existing d tortions in wage differentials will be magnified, thus stimulating the amount of education demanded even further Egypt presents a classic case of this ph nomenon with its and budget-busting government-guaranteed employment in the public sector and its massive civil service overstaffing of overcredential ized school graduates Note that this political economy process pulls scarce public resources away from the limited and often low-quality basic education available for the many Basi and toward more advanced education for the few. This is both inequitable and inefficient economically