ABSTRACT
Education is considered as being one area which may give rise to several forms of 'neighbourhood' effect. While the presence of indirect taxes does not require any adjustment when moving from private to social calculations of the absolute returns on education, taxes will be relevant to a consideration of the way in which the additional output is distributed between the various groups, and will later arise in this context. With education, as with other areas where people are the subject of the potential investment, there may be some value in distinguishing within the total result the portion which accrues to the individual and that which goes to other sections of the community. At the community level, the direct benefits are taken as being the increment in the individual's output which results from additional education. The impact of education in changing income distribution or providing equality of opportunity, may be explicit social goals.
