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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

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  • Angel De la Fuente
  • Juan F. Jimeno

Abstract

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.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1392.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1392

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Citations

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Cited by:
  1. Mendolicchio, Concetta & Rhein, Thomas, 2011. "The gender gap of returns on education across West European countries," IAB Discussion Paper 201120, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  2. Simeonova-Ganeva, Ralitsa, 2006. "Влияние На Човешкия Капитал Върху Икономическия Растеж (България, 1949-2005 Г.)
    [The Impact of Human Capital on the Economic Growth (Bulgari
    ," MPRA Paper 37244, University Library of Munich, Germany.
  3. L. J. �lvarez & E. Dhyne & M. Hoeberichts & C. Kwapil & H. Le Bihan & P. L�nnemann & F. Martins & R. Sabbatini & H. Stahl & P. Vermeulen & J. Vilmunen, 2005. "Sticky Prices in the Euro Area: a Summary of New Micro Evidence," DNB Working Papers, Netherlands Central Bank, Research Department 062, Netherlands Central Bank, Research Department.
  4. Fernandez, Cristina & Sevilla-Sanz, Almudena, 2006. "Social norms and household time allocation," ISER Working Paper Series 2006-38, Institute for Social and Economic Research.
  5. Gjipali Arsena & Kristo Suela, 2011. "Mincer Rates Of Return To Education In The Emerging Economy Of Albania," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 6(2), pages 27-36, August.
  6. BLÁZQUEZ CUESTA, Maite & RAMOS RODRIGO, José, 2008. "Recent Investments in Human Capital and its Effect on the Chances of Escaping from Low-paid Jobs: The Spanish Case," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 26, pages 161-180, Agosto.
  7. Adela Luque, 2005. "Skill mix and technology in Spain: evidence from firm level data," Banco de Espa�a Working Papers 0513, Banco de Espa�a.

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