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Returns to Education

  • Andersson, Åke E


    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

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    This study gives an account of theory, models and measurements of returns to higher education, seen as the results of economically rational investment decisions. The focus is on returns in the form of increased wages and salaries. These returns vary considerably between different countries and tend to be considerably larger in the USA than in western Europe. One of the reasons for these differences in returns may be the differences in systems of funding of higher education. It is claimed that practically all studies of returns to investments in higher education disregard the benefits from reductions in consumer transaction costs and the role played by education as an important input in household production functions. Econometric studies, reported in the paper, accordingly indicate that the level of education has a considerable impact on the structure of household consumption expenditures.

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    Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 163.

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    Length: 32 pages
    Date of creation: 28 Jan 2009
    Date of revision:
    Handle: RePEc:hhs:cesisp:0163
    Contact details of provider: Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
    Phone: +46 8 790 95 63
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    1. Robert H. Haveman & Barbara L. Wolfe, 1984. "Schooling and Economic Well-Being: The Role of Nonmarket Effects," Journal of Human Resources, University of Wisconsin Press, vol. 19(3), pages 377-407.
    2. Orley Ashenfelter & Alan Krueger, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," Working Papers 683, Princeton University, Department of Economics, Industrial Relations Section..
    3. 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, vol. 85(3), pages 586-99, June.
    4. Weale, Martin, 1993. "A Critical Evaluation of Rate of Return Analysis," Economic Journal, Royal Economic Society, vol. 103(418), pages 729-37, May.
    5. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, vol. 85(5), pages 1278-86, December.
    6. Isacsson, Gunnar, 1999. "Estimates of the return to schooling in Sweden from a large sample of twins," Labour Economics, Elsevier, vol. 6(4), pages 471-489, November.
    7. David Card, 2000. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," NBER Working Papers 7769, National Bureau of Economic Research, Inc.
    8. Ichino, Andrea & Winter-Ebmer, Rudolf, 1998. "Lower and Upper Bounds of Returns to Schooling: An Exercise in IV estimation with Different Instruments," CEPR Discussion Papers 2007, C.E.P.R. Discussion Papers.
    9. Jones, Patricia, 2001. "Are educated workers really more productive?," Journal of Development Economics, Elsevier, vol. 64(1), pages 57-79, February.
    10. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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