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Empirical Evidence on Human Capital Externalities

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Abstract

The focus of the paper is on the extent to which human capital formation (specifically, post-secondary education and training) benefits society in general, and productivity growth in particular, over and above its benefit to the individual. The paper provides a comprehensive review of the economic literature in this area and concludes that a very rough estimate of the benefit to society of investment in post-secondary education and training is in the range of 6 to 8 percent. This is in addition to the private rate of return of about 8 percent. The existence of this societal benefit (externality) justifies government assistance to post-secondary education and training. A possible extension of this work would be to attempt to determine if current assistance levels are consistent with the estimated level of the externality. Ce document porte principalement sur le degré auquel la formation du capital humain (plus particulièrement l’enseignement post-secondaire et la formation) bénéficie à la société en général et accroît la productivité, en plus du simple avantage qu’en tire l’individu. Le document offre un examen exhaustif de la littérature économique publiée à ce propos et conclut que la société bénéficie des investissements dans l’enseignement post-secondaire et la formation dans une proportion approximative de 6 à 8 p. 100. Et ce, en plus du taux de rendement individuel d’environ 8 p. 100. L’existence de bénéfices sociétaux (externalité) justifie l’aide du gouvernement à l’enseignement post-secondaire et à la formation. Une suite possible à ces travaux serait d’essayer de déterminer si les niveaux d’aide actuels sont conformes au niveau estimé d’externalité.

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Bibliographic Info

Paper provided by University of Western Ontario, Economic Policy Research Institute in its series University of Western Ontario, Economic Policy Research Institute Working Papers with number 20035.

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Date of creation: 2003
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Handle: RePEc:uwo:epuwoc:20035

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Postal: Economic Policy Research Institute, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2
Phone: 519-661-2111 Ext.85244
Web page: http://economics.uwo.ca/research/research_papers/epri_workingpapers.html

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Citations

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Cited by:
  1. Antonio Estache & Jean-François Perrault & Luc Savard, 2008. "Impact Of Infrastructure Spending In Sub-Saharan Africa: A Cge Modeling Approach," Cahiers de recherche 08-03, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  2. Seung Mo Choi, 2008. "How Large are Learning Externalities? Measurement by Calibration," Working Papers 2008-26, School of Economic Sciences, Washington State University.
  3. Konstantinos Angelopoulos & Jim Malley & Apostolis Philippopoulos, 2007. "Public Education Expenditure, Growth and Welfare," Working Papers 2007_09, Business School - Economics, University of Glasgow.
  4. Kirk A. Collins & James B. Davies, 2002. "Measuring Effective Tax Rates on Human Capital: The Canadian Case," University of Western Ontario, Economic Policy Research Institute Working Papers 20025, University of Western Ontario, Economic Policy Research Institute.
  5. Michael Landesmann & Sebastian Leitner & Robert Stehrer & Terry Ward, 2009. "Skills and Industrial Competitiveness," wiiw Research Reports 356, The Vienna Institute for International Economic Studies, wiiw.
  6. Giuseppe C.Ruggeri, 2009. "Regional Fiscal Flows: Measurement Tools," Working Papers 2009/4, Institut d'Economia de Barcelona (IEB).
  7. Gibson, John & McKenzie, David, 2010. "The economic consequences of"brain drain"of the best and brightest: microeconomic evidence from five countries," Policy Research Working Paper Series 5394, The World Bank.
  8. Antonio Estache & Jean-François Perrault & Luc Savard, 2007. "Impact of Infrastructure Spending in Mali: A CGE modeling approach," Cahiers de recherche 07-24, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  9. Teguh Yudo Wicaksono & Deni Friawan, 2008. "Recent Developments of Higher Education in Indonesia : Issues and Challenges," EABER Working Papers 21949, East Asian Bureau of Economic Research.
  10. Growiec, Katarzyna & Growiec, Jakub, 2009. "Social Capital, Trust, and Multiple Equilibria in Economic Performance," MPRA Paper 19518, University Library of Munich, Germany.
  11. Hunt, Gary L. & Mueller, Richard E., 2010. "Returns to Skill, Tax Policy, and North American Migration by Skill Level: Canada and the United States 1995 - 2001," CLSSRN working papers clsrn_admin-2010-11, Vancouver School of Economics, revised 26 Mar 2010.
  12. Daniel F. Heuermann, 2009. "Career Networks and Job Matching - Evidence on the Microeconomic Foundations of Human Capital Externalities," IAAEG Discussion Papers until 2011 200901, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  13. GROWIEC, Jakub, 2007. "Human capital, aggregation, and growth," CORE Discussion Papers 2007056, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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