IDEAS home Printed from https://ideas.repec.org/a/taf/edecon/v11y2003i2p169-192.html
   My bibliography  Save this article

Estimating the Social Rate of Return to Education for Indigenous Australians

Author

Listed:
  • P. N. Junankar

Abstract

The present paper compares estimates of the social rate of return to education for Indigenous Australians with those for non-Indigenous Australians. The social rate of return measures the net benefits to society of educating its citizens. If education is treated as an investment by society in its people, then Australian society will be made better off by an increase in educational investment as long as the social rate of return is higher than that for other public investments. This paper provides a discussion of the concept of the social rate of return to education and some estimates for Indigenous Australians. Higher levels of education, in general, lead to an increased probability of finding employment and higher levels of income in employment. Hence, an increased level of education for an Indigenous person would be of advantage in economic terms; the private rate of return to education is likely to be quite high. In addition, we argue that increasing education has important social benefits (so-called 'externalities') for Indigenous people, and society in general: improved education would lead to better nutrition, to better living conditions, to better access to health services, and hence to a longer and healthier life. This means that productivity would be higher for Indigenous people and they would have higher incomes over a longer period of time. In addition, we argue that improved levels of education have the capacity to contribute to a decrease in the numbers of Indigenous people who are imprisoned, and thus lead to a direct reduction in the costs of imprisonment. Thus, increased education increases the earnings span, decreases prison costs and hence increases the social rate of return. We find that the social rate of return for education is generally higher for Indigenous Australians than for non-Indigenous Australians. This suggests, from a public policy perspective, that government should allocate increased funding for the education of Indigenous people since this social rate of return is greater than the Department of Finance recommended cut-off rates for government investment projects.

Suggested Citation

  • P. N. Junankar, 2003. "Estimating the Social Rate of Return to Education for Indigenous Australians," Education Economics, Taylor & Francis Journals, vol. 11(2), pages 169-192.
  • Handle: RePEc:taf:edecon:v:11:y:2003:i:2:p:169-192 DOI: 10.1080/09645290210135751
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/10.1080/09645290210135751
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
    2. Miller, Paul W & Mulvey, Charles & Martin, Nick, 1995. "What Do Twins Studies Reveal about the Economic Returns to Education? A Comparison of Australian and U.S. Findings," American Economic Review, American Economic Association, pages 586-599.
    3. Janankar, P.N. & Kapuscinski, C.A., 1991. "Aboriginal Employment and Unemployment : An Overview," CEPR Discussion Papers 255, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    4. Bowles, Samuel & Gintis, Herbert, 1975. "The Problem with Human Capital Theory-A Marxian Critique," American Economic Review, American Economic Association, pages 74-82.
    5. P.N. Junankar & Cezary A. Kapuscinski, 1991. "Aboriginal Employment And Unemployment An Overview," Economic Papers, The Economic Society of Australia, vol. 10(4), pages 30-43, December.
    6. Chapman, Bruce, 1997. "Conceptual Issues and the Australian Experience with Income Contingent Charges for Higher Education," Economic Journal, Royal Economic Society, vol. 107(442), pages 738-751, May.
    7. Weale, Martin, 1993. "A Critical Evaluation of Rate of Return Analysis," Economic Journal, Royal Economic Society, vol. 103(418), pages 729-737, May.
    8. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, pages 1157-1173.
    9. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, pages 1157-1173.
    10. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
    11. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, pages 3-22.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Itismita Mohanty & Robert Tanton, 2012. "A wellbeing framework with adaptive capacity," NATSEM Working Paper Series 12/17, University of Canberra, National Centre for Social and Economic Modelling.
    2. Laurie Brown & Binod Nepal, 2011. "Modelling Potential Impact of Improved Survival of Indigenous Australians on Work-Life Labour Income Gap Between Indigenous and Average Australians," NATSEM Working Paper Series 11/15, University of Canberra, National Centre for Social and Economic Modelling.
    3. World Bank, 2005. "Central America : Education Strategy Paper," World Bank Other Operational Studies 8397, The World Bank.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:edecon:v:11:y:2003:i:2:p:169-192. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/CEDE20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.