INTRODUCTION

Education and health are the two important social variables that expand the human capital base of an individual, thereby enabling an individual to make better use of economic opportunities. These variables also foster the capacity of an individual to enhance the freedom of enjoying better quality of life. Thus education contributes to economic growth via human capital formation and it also leads to expansion of freedom through human development (Dreze and Sen, 2002).

Bowman (1992) opines that apart from enriching economic growth and making the individuals better producers, there are also other contributions of human capital. These other aspects are referred to as ‘externalities of human capital’. Included in these externalities are the operative forces, transmitting knowledge across generations. It evinces in particular some external benefits of education among women. Education enables a woman to (a) acquire the ability to manage her own household, given the budget constraint and also to ensure that the family's nutritional standards and hygiene is maintained and (b) contribute to the quality of learning in succeeding generations (Schultz, 1995; p. 546).

In sum, returns from education can be classified in terms of economic returns and social returns (referred to as the ‘externalities of education’). ‘Externality’ in conventional economics refers to those actions of a set of economic agents that could have either positive or negative effects on other set of economic agents. The market is inoperative to such actions corresponding to appropriate prices and hence they are external to the market forces.