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Heterogeneity in Labor Market Returns to Adult Education

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  • Kauhanen, Antti
  • Virtanen, Hanna

Abstract

We study the earnings and employment effects of enrollment in formal adult education in Finland using a combination of matching and panel data methods. We also conduct cost-benefit analyses. The results show that adult education increases earnings and employment both in secondary and higher education, but the magnitude depends on the original level of education. The earnings and employment effects are the largest for the less educated group (those with only compulsory education). For those already having a degree from higher education, the employment and earnings effects are small. There is substantial heterogeneity behind the average effects. The earning gains differ by field and type of education both in secondary and higher education. Cost-benefit analysis shows that at the individual level, the benefits exceed the costs for those with compulsory and secondary education but not for those with higher education. When the societal costs and benefits are considered, we find that the benefits exceed the costs mostly when the individuals upgrade their level of education and are young enough. The results suggest that public investments in adult education should be carefully targeted. This could for example mean targeting individuals who upgrade their qualifications.

Suggested Citation

  • Kauhanen, Antti & Virtanen, Hanna, 2021. "Heterogeneity in Labor Market Returns to Adult Education," ETLA Working Papers 91, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:wpaper:91
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    Cited by:

    1. Matti Sarvimäki & Hanna Pesola, 2022. "Intergenerational Spillovers of Integration Policies: Evidence from Finland’s Integration Plans," RF Berlin - CReAM Discussion Paper Series 2212, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    2. Machin, Stephen & McNally, Sandra & Terrier, Camille & Ventura, Guglielmo, 2020. "Closing the Gap between Vocational and General Education? Evidence from University Technical Colleges in England," IZA Discussion Papers 13837, Institute of Labor Economics (IZA).
    3. Pesola, Hanna Onerva & Sarvimäki, Matti, 2022. "Intergenerational Spillovers of Integration Policies: Evidence from Finland’s Integration Plans," IZA Discussion Papers 15310, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Adult education; Employment; Earnings;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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