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Risks and returns to educational fields – A financial asset approach to vocational and academic education

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  • Glocker, Daniela
  • Storck, Johanna

Abstract

Applying 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 75 fields of education, differentiating 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 types of education.

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  • Glocker, Daniela & Storck, Johanna, 2014. "Risks and returns to educational fields – A financial asset approach to vocational and academic education," Economics of Education Review, Elsevier, vol. 42(C), pages 109-129.
    • Handle: RePEc:eee:ecoedu:v:42:y:2014:i:c:p:109-129
    DOI: 10.1016/j.econedurev.2014.06.004
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    Cited by:

    1. Freier, Ronny & Schumann, Mathias & Siedler, Thomas, 2015. "The earnings returns to graduating with honors — Evidence from law graduates," Labour Economics, Elsevier, vol. 34(C), pages 39-50.
    2. Melnikov, Roman, 2018. "Evaluation of economic consequences of the choice of educational field in modern Russian conditions," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 49, pages 30-56.
    3. Fischer, Benjamin & Hügle, Dominik, 2020. "The private and fiscal returns to higher education: A simulation approach for a young German cohort," Discussion Papers 2020/21, Free University Berlin, School of Business & Economics.
    4. Hügle, Dominik, 2020. "Higher education funding in Germany: A distributional lifetime perspective," Discussion Papers 2021/1, Free University Berlin, School of Business & Economics.
    5. d’Astous, Philippe & Shore, Stephen H., 2024. "Programs of study and earnings dynamics," Labour Economics, Elsevier, vol. 88(C).
    6. Celeste K. Carruthers & Christopher Jepsen, 2020. "Vocational Education: An International Perspective," CESifo Working Paper Series 8718, CESifo.
    7. Neugebauer, Martin & Weiss, Felix, 2017. "Does a Bachelor's degree pay off? Labor market outcomes of academic versus vocational education after Bologna," Discussion Papers 2017/11, Free University Berlin, School of Business & Economics.
    8. Fichtl, Anita & Piopiunik, Marc, 2017. "Absolventen von Fachhochschulen und Universitäten im Vergleich: FuE-Tätigkeiten, Arbeitsmarktergebnisse, Kompetenzen und Mobilität," Studien zum deutschen Innovationssystem 14-2017, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.

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    More about this item

    Keywords

    Educational choice; Human capital investment; Returns to schooling; Mean–variance analysis;
    All these keywords.

    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

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