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New Estimates of the Private Rate of Return to University Education in Australia

Listed author(s):
  • Jeff Borland


    (Department of Economics and Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

The objective of this study is to provide new estimates of the average private rate of return to a university degree in Australia. It considers the case of a hypothetical individual who has completed high school in 2000, and is making a decision on whether to begin a three-year bachelor degree or to enter the workforce in 2001. For the 'base case' scenario of a 'representative' individual making a decision on whether to attend university, the estimate of the average private rate of return to a three-year bachelor degree is 14.5 per cent. Underlying this estimate is a lifetime net monetary gain of $380,958 from undertaking the degree (assuming a zero rate of discount). Estimates of the rate of return to a bachelor degree are fairly robust to alternative scenarios. Rates of return do however show a wide variation across the field of qualification categories. The estimated returns are relatively high for business and administration, and engineering graduates, and relatively low for graduates in the fields of society and culture, and science.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2002n14.

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Length: 32 pages
Date of creation: Jul 2002
Handle: RePEc:iae:iaewps:wp2002n14
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Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia

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  1. David Johnson & Roger Wilkins, 2003. "The Net Benefit To Government Of Higher Education: A “Balance Sheet” Approach," Economic Papers, The Economic Society of Australia, vol. 22(2), pages 1-20, June.
  2. Borland, Jeff, 1996. "Education and the Structure of Earnings in Australia," The Economic Record, The Economic Society of Australia, vol. 72(219), pages 370-380, December.
  3. Chapman, B & Salvage, T, 1997. "The Consequences of Recent Changes in Financing for Australian Higher Education," CEPR Discussion Papers 367, Centre for Economic Policy Research, Research School of Economics, Australian National University.
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