Question

Education provides both private benefits to those who receive it and broader social benefits for the economy as a whole. Think about the types of policies a government can follow to address the issue of positive spillovers in technology and then suggest a parallel set of policies that governments could follow for addressing positive externalities in education.

Short answer

The positive externality is that currently, businesses receive knowledgeable workers without having to pay to train or educate them.
Governments can establish a tax on companies that rely on public education to train their workers, and use that tax to invest in further education.

Step-by-step solution

Content Introduction

The government provides public goods which benefit both citizens and businesses alike. The benefits received vary on how much the public goods are utilized. Many businesses benefit from public education, as they receive workers with basic education and skills without having to take the time to train them or pay for it directly. This is what's called a positive spillover.

Content Explanation

The key takeaway is that government subsidized education trains future workers without a direct cost to businesses. So in an altruistic society where all benefits are paid for in some way, businesses should pay either a tax porportional to their benefit of free education. However there can be non-monetary solutions such as having businesses for job experience partnerships with schools and university.