Private and Social Returns to Education in Labour Surplus Economies

[Excerpt] The purpose of this paper is to consider the cost-benefit criterion for resource allocation in labour surplus economies calling particular attention to the contrasts with full employment economies. The specific plan is as follows. Section 1 reviews the debate over the applicability of cost-benefit analysis to problems of investment in education. Section 2 draws two important distinctions which are not always clear to educational planners and enumerates the likely benefits, both private and social, from education. Section 3 considers the case of full employment economies. Section 4 looks at the private returns to education in labour surplus economies in relation to the demand for education. Section 5 considers the social costs and benefits in labour surplus economies. Section 6 raises the problems of measuring marginal social rates of return and demonstrates the inadequacy of wage differentials as a measure of marginal social benefit. Section 7 summarizes the main points

Education and Economic Mobility

Surveys the literature on how education affects intergenerational mobility. Discusses the impacts of parents' education, financial resources, GED and job training programs, K-12 quality improvements, and early childhood education and intervention

Economic impact of education: evidence and relevance

No abstract available

The Benefits and Costs of Alternative Strategies to Improve Educational Outcomes

This paper reviews the stylized facts regarding the levels of human capital investments and the returns to those investments in developing countries. These returns are substantial and are pervasive across demographic groups. Returns are comparable between men and women and between urban and rural residents. The study shows that 23% of children in developing countries do not complete the fifth grade and of these, 55% started school but dropped out. We argue that eliminating dropouts is the most cost effective way to make progress on the goal of Universal Primary Education. Of the various mechanisms we can use, mechanisms that stimulate schooling demand have the strongest evidence of success to date and are the most cost effective.

Is More Better? The Impact of Postsecondary Education on the Economic and Social Well-Being of American Society

Provides a review of research literature that examines the impact of higher education on individuals and society. Looks at economic and non-economic benefits and costs associated with an increase in public investment in postsecondary education

Education and earnings in a transition economy (Vietnam)

The transition from a centrally planned to a market economy is likely to have a strong impact on the labor market, on relative earnings, and on returns to education. Major economic reforms in Vietnam since 1986 (the policy known as"Doi Moi") have included a number of measures to liberalize the labor market. It is too soon to assess the full impact of these reforms, but the authors analyze the returns to education, on the basis of earnings in 1992-93 (collected in the first Vietnam Living Standards Survey). This represents one of the first country-wide analyses of the monetary benefits of schooling in Vietnam at a time when the labor market was in transition. On average, the estimated rates of returns are still relatively low, which is to be expected, since salary reforms were not introduced until 1993. Average private rates of return to primary education (13 percent) and university education (11 percent) are higher than those to secondary and vocational education (only 4 to 5 percent). Returns to higher education are slightly higher for women (12 percent) than for men (10 percent). Evidence from other transition economies suggests that returns are likely to increase as reforms in the labor market take full effect. The results support this hypothesis: Returns for younger Vietnamese workers (14 percent) are considerably higher than for older workers (only 4 percent). Implications for policymaking: 1) it is important to monitor future earnings and trends in the labor market, as updates of this analysis could provide more robust estimates of the transition's effects on earnings and returns to education. 2) At a time when the Vietnamese government is reassessing its pricing policy, the fact that private rates of return to higher education are relatively high suggests the potential for greater cost recovery. 3) Efforts to improve efficiency in secondary and higher education could increase the rate of return by lowering costs.Teaching and Learning,Decentralization,Public Health Promotion,Health Monitoring&Evaluation,Curriculum&Instruction,Health Monitoring&Evaluation,Curriculum&Instruction,Gender and Education,Primary Education,Teaching and Learning

The Private and Fiscal Returns to Schooling and the Effect of Public Policies on Private Incentives to Invest in Education: A General Framework and Some Results for the EU

This paper develops a comprehensive framework for the quantitative analysis of the private and fiscal returns to schooling and of the effect of public policies on private incentives to invest in education. This framework is applied to 14 member states of the European Union. For each of these countries, we construct estimates of the private return to an additional year of schooling for an individual of average attainment, taking into account the effects of education on wages and employment probabilities after allowing for academic failure rates, the direct and opportunity costs of schooling, and the impact of personal taxes, social security contributions and unemployment and pension benefits on net incomes. We also construct a set of effective tax and subsidy rates that measure the effects of different public policies on the private returns to education, and measures of the fiscal returns to schooling that capture the long-term effects of a marginal increase in attainment on public finances under conditions that approximate general equilibrium.

Can Vietnam Achieve One of its Millennium Development Goals? An analysis of schooling dropouts of children

The objectives of this study are to identify the underlying determinants of the schooling dropout in Vietnam and to project its trend in the future up to 2015. Our examination is largely based on the three Vietnam’s Living Standard Surveys conducted in 1992/93, 1997/98 and 2001/02 and the conventional framework of educational investment at the household level. The major determinants of the schooling dropout choice by households are found to be variables of child’s characteristics (such as age, working time, primary education, and number of siblings) and household economic situation (such as parental education, household’s per capita expenditure, and cost of schooling). In general, the effects of these determinants on the schooling dropout probability are statistically significant. In particular, the schooling dropout probability has been very sensitive to the changes in the household’s per capita expenditure and the direct costs of schooling, whereas recently the other determinants have had only minor impacts. In terms of schooling, girls have benefited more than boys did from their household's per capita expenditure increase, while they have suffered more than boys did from an increase in the direct cost of schooling. These differences, however, recently have narrowed substantially. The dropout situation is also regional specific and hence, a comprehensive approach is needed to deal with it. Moreover, at present the low quality of education is serious problem. Together with the parents' incorrect perception of and the community’s attitude to education values, this may increase the possibility of children’s schooling dropout. The dropout situation is also very much dependent on the public funding for education, which is still not effective in reducing the household current excessive financial burden and still biased against the poor regions. The projection outcomes of the schooling dropout probability of children in the future up to 2015 is very much depending on the assumptions of the changes in the household’s per capita expenditure and the cost of schooling. When the growth rate of the cost of schooling is much higher (for example, by 1.2 percentage points) than that of the household’s per capita expenditure, the dropout rate would first decrease and increase again after 2010. The tentative assessments suggest that in these cases, there is a chance for Vietnam to achieve the national targets of the primary and lower secondary net enrolment rates in 2010. However, Vietnam could very hardly to achieve the MDG on the universal completion of primary education in 2015 and moreover, the achievements recorded by 2010 would be deteriorated. Regarding the scenarios, where the pace of changes in the cost of schooling is lower than that of the household’s per capita expenditure, the projections seem to provide a rather bright picture in terms of achieving the national education targets in 2010 and the MDG on education in 2015. The projections also show that there is a reason to be more optimistic about the elimination of the gender gap in education by 2010.http://deepblue.lib.umich.edu/bitstream/2027.42/40162/3/wp776.pd

Return on investment in higher education : evidence for different subjects, degrees and gender in Germany

Applying an investment perspective to higher education, the paper presents detailed empirical evidence on the rate of return to higher education and its determinants. Employing a sample of 17,180 higher education graduates derived from the German Labor Force Survey 2004, we show considerable variation in the rates of return to higher education across the different subjects, with some subjects on average not representing attractive private investments from an economic point of view. We find that the decision what to study is worth several hundred thousand Euros. Applying regression analysis, we find gender- and degree-specific return advantages only in certain subjects. Comparing the return of an investment in higher education and the production cost of higher education, we show that more expensive subjects (apart from Medicine) yield a lower return. When considering the cost of study, the overall order of attractiveness of the different forms of education remains stable, but the investment in further subjects is no longer clearly attractive. Keywords: Returns to Education, Human Capital, Higher Education Earnings Capacity

The private and social return to schooling in Italy

We estimate the private (individual) and social return to schooling in Italy and four macro regions. Our estimates take into account the effects of schooling on employment and wages as well as the key features of the Italian tax and social insurance system. We find that the individual return to schooling compares favorably to the return to financial assets (especially in the South). At the social level, the available infrastructure-capital data indicates that the return to schooling exceeds that to infrastructures in the South.Education, Regional Development, Wages, Employment probability