Abstract
<jats:p>This paper examines the systemic market failures inherent in the educational sector and their subsequent impact on labor market equity. Education serves a dual role as both a private investment in human capital and a public good that generates significant social spillovers. However, the presence of positive externalities, pervasive information asymmetries, and capital market imperfections often prevents the market from reaching a socially optimal equilibrium. These failures are particularly acute for low-income households, where information frictions regarding academic potential and credit constraints limit educational attainment and upward mobility. By synthesizing theoretical frameworks with empirical insights into human development and institutional capacity, this research argues that untargeted market mechanisms are insufficient for achieving equitable employment outcomes. The analysis highlights how state intervention is required not only to subsidize education but also to resolve coordination failures and provide the institutional infrastructure necessary for a meritocratic labor market. The findings suggest that reducing educational inequality is a prerequisite for mitigating broader socio-economic disparities and fostering long-term macroeconomic stability</jats:p>