Risks and Returns to Educational Fields: A Financial Asset Approach to Vocational and Academic Education
AbstractApplying a financial assets approach, we analyze the returns and earnings risk of investments into different types of human capital. Even though the returns from investing in human capital are extensively studied, little is known about the properties of the returns to different types of human capital within a given educational path. Using information from the German Micro Census, we estimate the risk and returns to around 70 fields of education and differentiate between vocational and academic education. We identify fields of education that are efficient investment goods, i.e. high returns at a given level of risk, and fields that are chosen for other (non-monetary) reasons. Furthermore, we rank fields of education by their return per unit of risk and find that university education is not always superior to other educational paths.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1240.
Length: 368 p.
Date of creation: 2012
Date of revision:
Educational choice; human capital investment; returns to schooling; mean-variance analysis;
Find related papers by JEL classification:
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-09 (All new papers)
- NEP-EDU-2012-09-09 (Education)
- NEP-HRM-2012-09-09 (Human Capital & Human Resource Management)
- NEP-LAB-2012-09-09 (Labour Economics)
- NEP-LTV-2012-09-09 (Unemployment, Inequality & Poverty)
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