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The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU

Author

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  • Ángel de la Fuente

    () (Instituto de Análisis Económico, CSIC)

  • Juan F. Jimeno

    () (Banco de España)

Abstract

This paper develops a comprehensive framework for the quantitative analysis of the private and fiscal returns to schooling and of the effect of public policies on private incentives to invest in education. This framework is applied to 14 member states of the European Union. For each of these countries, we construct estimates of the private return to an additional year of schooling for an individual of average attainment, taking into account the effects of education on wages and employment probabilities after allowing for academic failure rates, the direct and opportunity costs of schooling, and the impact of personal taxes, social security contributions and unemployment and pension benefits on net incomes. We also construct a set of effective tax and subsidy rates that measure the effects of different public policies on the private returns to education, and measures of the fiscal returns to schooling that capture the long term effects of a marginal increase in attainment on public finances under conditions that approximate general equilibrium.

Suggested Citation

  • Ángel de la Fuente & Juan F. Jimeno, 2005. "The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU," Working Papers 0509, Banco de España;Working Papers Homepage.
  • Handle: RePEc:bde:wpaper:0509
    as

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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Anita V. Staneva & Hany Abdel-Latif, 2016. "From Soviet to Europe: Returns to Education Puzzle in Bulgaria," LABOUR, CEIS, vol. 30(3), pages 347-367, September.
    2. Heckman, James J. & Jacobs, Bas, 2009. "Policies to Create and Destroy Human Capital in Europe," IZA Discussion Papers 4680, Institute for the Study of Labor (IZA).
    3. repec:oup:cesifo:v:54:y:2008:i:2:p:277-312. is not listed on IDEAS
    4. Luis J. Álvarez & Emmanuel Dhyne & Marco Hoeberichts & Claudia Kwapil & Hervé Le Bihan & Patrick Lünnemann & Fernando Martins & Roberto Sabbatini & Harald Stahl & Philip Vermeulen & Jouko Vilmunen, 2006. "Sticky Prices in the Euro Area: A Summary of New Micro-Evidence," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 575-584, 04-05.
    5. Fernandez, Cristina & Sevilla-Sanz, Almudena, 2006. "Social norms and household time allocation," ISER Working Paper Series 2006-38, Institute for Social and Economic Research.
    6. Concetta Mendolicchio & Thomas Rhein, 2014. "The gender gap of returns on education across West European countries," International Journal of Manpower, Emerald Group Publishing, vol. 35(3), pages 219-249, May.
    7. BLÁZQUEZ CUESTA, Maite & RAMOS RODRIGO, José, 2008. "Recent Investments in Human Capital and its Effect on the Chances of Escaping from Low-paid Jobs: The Spanish Case," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 26, pages 161-180, Agosto.
    8. Simeonova-Ganeva, Ralitsa, 2006. "Влияние На Човешкия Капитал Върху Икономическия Растеж (България, 1949-2005 Г.)
      [The Impact of Human Capital on the Economic Growth (Bulgaria, 1949-2005)]
      ," MPRA Paper 37244, University Library of Munich, Germany.
    9. Adela Luque, 2005. "Skill mix and technology in Spain: evidence from firm level data," Working Papers 0513, Banco de España;Working Papers Homepage.
    10. Maite Blázquez Cuesta & Wiemer Salverda, 2009. "Low-wage Employment and the Role of Education and On-the-job Training," LABOUR, CEIS, vol. 23(s1), pages 5-35, March.
    11. Gjipali Arsena & Kristo Suela, 2011. "Mincer Rates Of Return To Education In The Emerging Economy Of Albania," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 6(2), pages 27-36, August.

    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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