Economic Returns and Risks to Investment in Education: An Application of the Multifactor CAPM
Considering the investment in education as uncertain financial decision making we modify the short-cut method of calculating rates of return to education by incorporating the risk premium. Recognizing that market risk isn’t the only factor affecting returns, we estimate the returns to education in fifteen member - states of the European Union and the Organisation for Economic Co-operation and Development during the period 2005 – 2007 as seen from a macroeconomic point of view using Multifactor CAPM. Following this model we assess, except market risk, the impact of three key macroeconomic variables (investments, productivity and unemployment) on returns and, using panel data regression techniques, we investigate whether this holds true with respect to investment in education. We also evaluate the risk – adjusted performance of investment in education and the role of returns as well as that of the key macroeconomic variables to economic development. The results tend to confirm the theoretical expectations and empirical literature. The purpose of the present study is twofold: first, to estimate the relationship between education returns and risk and second to measure the impact of return and key macro factors on real GDP growth rate, therefore casting light in the channels through which the economic growth can be affected.
Volume (Year): 4 (2011)
Issue (Month): 1 (March)
|Contact details of provider:|| Web page: http://ijbesar.teiemt.gr/|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ignacio Palacios-Huerta, 2003. "The Robustness of the Conditional CAPM with Human Capital," Journal of Financial Econometrics, Society for Financial Econometrics, vol. 1(2), pages 272-289.
- Christiansen, Charlotte & Joensen, Juanna Schroter & Nielsen, Helena Skyt, 2007.
"The risk-return trade-off in human capital investment,"
Elsevier, vol. 14(6), pages 971-986, December.
- Charlotte Christiansen & Juanna Schröter Joensen, 2006. "The Risk-Return Trade-Off in Human Capital Investment," Economics Working Papers 2006-02, Department of Economics and Business Economics, Aarhus University.
- Christiansen, Charlotte & Joensen, Juanna Schrøter & Nielsen, Helena Skyt, 2006. "The Risk-Return Trade-Off in Human Capital Investment," IZA Discussion Papers 1962, Institute for the Study of Labor (IZA).
- Ignacio Palacios-Huerta, 2003. "An Empirical Analysis of the Risk Properties of Human Capital Returns," American Economic Review, American Economic Association, vol. 93(3), pages 948-964, June.
- Ignacio Palacios-Huerta, 2001. "An Empirical Analysis of the Risk Properties of Human Capital Returns," Working Papers 2001-10, Brown University, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:tei:journl:v:4:y:2011:i:1:p:95-120. 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: (Kostas Stergidis)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.