Education, poverty and the 'missing link' The limits of human capital theory as a paradigm for poverty reduction
One of the main areas where human capital theory has been especially influential is in the relationship between investment in education and poverty reduction. However, up to now, little success can be reported, with huge differences between the average levels of education globally achieved and the persistence of high poverty rates. This chapter reflects on the limitations of neoclassical economics and human capital theory as a valid paradigm to formulate policies for poverty reduction. The chapter first identifies the main limitations of using the human capital theory as the central theory for policy making in educational development. The strong macroeconomic and microeconomic assumptions that are regularly included within dominant models of educational policy hardly happen, but policy makers keep formulating policies as if they did. Second, the chapter points out why most education policies fail to address the question of inequalities, which can be understood as the "missing link" between education, economic development, and poverty reduction