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Modelling the distribution of returns on higher education: A microsimulation approach

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  • Courtioux, Pierre
  • Gregoir, Stéphane
  • Houeto, Dede

Abstract

Cost-sharing policies for higher education have been implemented in several countries in various ways. We argue that to assess their appropriateness and facilitate their implementation it is necessary to develop statistical indicators of the distribution of returns. When starting a higher education programme, the return on a particular degree is uncertain, and risk-adverse students or those from low-income families may be reluctant to enrol if this means taking out a loan. These statistical indicators would therefore be natural inputs of cost-sharing policies intended to preserve the individual economic incentives to go to university and simultaneously provide an insurance role. We present a dynamic microsimulation model of individual lifetime educational output in the French labour market which uses econometric modelling of individual wages, labour market transitions, social security contributions and benefits. It relies largely on labour force survey data and mortality tables. In the standard internal rate of return framework, the model is used to compute the distribution of returns to higher education, for a given generation. The results show that the percentage of negative returns is close to 3.5%.

Suggested Citation

  • Courtioux, Pierre & Gregoir, Stéphane & Houeto, Dede, 2014. "Modelling the distribution of returns on higher education: A microsimulation approach," Economic Modelling, Elsevier, vol. 38(C), pages 328-340.
  • Handle: RePEc:eee:ecmode:v:38:y:2014:i:c:p:328-340
    DOI: 10.1016/j.econmod.2014.01.010
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Courtioux, Pierre & Lignon, Vincent, 2016. "A good career or a good marriage: The returns of higher education in France," Economic Modelling, Elsevier, vol. 57(C), pages 221-237.
    2. repec:ijm:journl:v10:y:2018:i:1:p:61-96 is not listed on IDEAS
    3. Levin, Mark (Левин, Марк) & Matrosova, Ksenia (Матросова, Ксения), 2018. "Development and Research of Economic Behavior of Households in Changing Conditions
      [Разработка И Исследование Экономического Поведения Домохозяйств В Изменяющихся Условиях]
      ," Working Papers 041825, Russian Presidential Academy of National Economy and Public Administration.
    4. Kidd, Michael P. & O'Leary, Nigel & Sloane, Peter, 2017. "The impact of mobility on early career earnings: A quantile regression approach for UK graduates," Economic Modelling, Elsevier, vol. 62(C), pages 90-102.
    5. repec:hpe:journl:y:2017:v:220:i:1:p:89-106 is not listed on IDEAS
    6. repec:eee:ecmode:v:73:y:2018:i:c:p:329-342 is not listed on IDEAS

    More about this item

    Keywords

    Return to education; Higher education; Dynamic microsimulation;

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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