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Schooling and national income: how large are the externalities?


  • Theodore Breton


This paper uses a new data-set for cumulative national investment in formal schooling and a new instrument for schooling to estimate the national return on investment in 61 countries. These estimates are combined with data on the private rate of return on investment in schooling to estimate the external rate of return. In 1990 the external rate of return ranged from 10% in high-income countries to over 50% in the lowest-income countries. The external benefits of schooling are about equal to the private benefits in high-income countries and three times the private benefits in the lowest-income countries.

Suggested Citation

  • Theodore Breton, 2010. "Schooling and national income: how large are the externalities?," Education Economics, Taylor & Francis Journals, vol. 18(1), pages 67-92.
  • Handle: RePEc:taf:edecon:v:18:y:2010:i:1:p:67-92 DOI: 10.1080/09645290801939645

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    References listed on IDEAS

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    Cited by:

    1. Kate Glazebrook & Ligang Song, 2013. "Is China up to the Test? A Review of Theories and Priorities for Education Investment for a Modern China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 21(4), pages 56-78, July.
    2. Breton, Theodore R., 2015. "Human capital and growth in Japan: Converging to the steady state in a 1% world," Journal of the Japanese and International Economies, Elsevier, vol. 36(C), pages 73-89.
    3. Breton, Theodore R., 2011. "The quality vs. the quantity of schooling: What drives economic growth?," Economics of Education Review, Elsevier, vol. 30(4), pages 765-773, August.
    4. Theodore R. Breton, 2015. "Higher Test Scores or More Schooling? Another Look at the Causes of Economic Growth," Journal of Human Capital, University of Chicago Press, vol. 9(2), pages 239-263.

    More about this item


    human capital; education; schooling; economic growth; external benefits;

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models


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