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The Private Internal Rates of Return to Tertiary Education: New Estimates for 21 OECD Countries

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  • Romina Boarini

    (OECD)

  • Hubert Strauss

Abstract

This study provides estimates of the private Internal Rates of Return (IRR) to tertiary education for women and men in 21 OECD countries, for the years between 1991 and 2005. IRR are computed by estimating labour market premia on cross-country comparable individual-level data. Labour market premia are then adjusted for fiscal factors and education cost. Returns to an additional year of tertiary education are, on average, above 8% and vary in a range from 4 to 15% in the countries and in the period under study. IRR are relatively homogenous across gender. Overall, a slightly increasing trend is observed over time. The study discusses various policy levers for shaping individual incentives to invest in tertiary education and provides some illustrative quantification of the impact of policy changes on those incentives. Les taux de rendement privés de l'éducation supérieure : nouvelles estimations pour 21 pays de l'OCDE Cette étude fournit des estimations des taux de rendement privés de l'éducation supérieure, pour les hommes ainsi que pour les femmes, dans 21 pays de l'OCDE et pour les années comprises entre 1991 et 2005. Les rendements sont calculés en estimant les primes sur le marché du travail à partir de données individuelles comparables entre les pays. Ces primes sont ensuite corrigées par des facteurs fiscaux et par les coûts de l'éducation. Les rendements d'une année supplémentaire d'enseignement supérieur sont en moyenne supérieurs à 8%, et varient dans un intervalle de 4% à 15% entre pays et pour la période considérée. Les rendements sont à peu près les mêmes pour les hommes et pour les femmes. Dans l'ensemble, une légère tendance à la hausse apparaît dans la période d'observation. L'étude examine l’influence des différentes politiques sur les incitations individuelles à investir dans l'éducation supérieure et propose des estimations de l'impact des réformes sur ces incitations.

Suggested Citation

  • Romina Boarini & Hubert Strauss, 2007. "The Private Internal Rates of Return to Tertiary Education: New Estimates for 21 OECD Countries," OECD Economics Department Working Papers 591, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:591-en
    DOI: 10.1787/031008650733
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    Citations

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    Cited by:

    1. Romina Boarini, 2009. "Towards better Schools and more Equal Opportunities for Learning in Italy," OECD Economics Department Working Papers 727, OECD Publishing.
    2. repec:lic:licosd:31412 is not listed on IDEAS
    3. Andrea Ichino & Loukas Karabarbounis & Enrico Moretti, 2011. "The Political Economy Of Intergenerational Income Mobility," Economic Inquiry, Western Economic Association International, vol. 49(1), pages 47-69, January.
    4. Anders Björklund & Richard B. Freeman, 2010. "Searching for Optimal Inequality/Incentives," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 25-56, National Bureau of Economic Research, Inc.
    5. Tjaša Bartolj & Aleš AhCan & Aljoša Feldin & Sašo Polanec, 2013. "Evolution of private returns to tertiary education during transition: evidence from Slovenia," Post-Communist Economies, Taylor & Francis Journals, vol. 25(3), pages 407-424, September.
    6. Fragetta, Matteo, 2010. "Identification in Structural Vector Autoregressions Through Graphical Modelling and Monetary Policy: A Cross-Country Analysis," CELPE Discussion Papers 112, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    7. Peter Huber & Julia Bock‐Schappelwein, 2014. "The Effects of Liberalizing Migration on Permanent Migrants' Education Structure," Journal of Common Market Studies, Wiley Blackwell, vol. 52(2), pages 268-284, March.
    8. Romina Boarini & Joaquim Oliveira Martins & Hubert Strauss & Christine de la Maisonneuve & Giuseppe Nicoletti, 2008. "Investment in Tertiary Education: Main Determinants and Implications for Policy," CESifo Economic Studies, CESifo Group, vol. 54(2), pages 277-312.
    9. Guarini, Giulio & Laureti, Tiziana & Garofalo, Giuseppe, 2020. "Socio-institutional determinants of educational resource efficiency according to the capability approach: An endogenous stochastic frontier analysis," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    10. Storm, Ilse & Uiters, Ellen & Busch, Mirjam C.M. & den Broeder, Lea & Schuit, Albertine J., 2015. "The relevance of work-related learning for vulnerable groups. Dutch case study of a Health Impact Assessment with equity focus," Health Policy, Elsevier, vol. 119(7), pages 915-924.
    11. Orsetta Causa & Catherine Chapuis, 2009. "Equity in Student Achievement Across OECD Countries: An Investigation of the Role of Policies," OECD Economics Department Working Papers 708, OECD Publishing.
    12. Richard B. Freeman, 2009. "What Does Global Expansion of Higher Education Mean for the US?," NBER Working Papers 14962, National Bureau of Economic Research, Inc.
    13. Andrew Sharpe & Jean-François Arsenault, 2009. "A Review of the Potential Impacts of the Métis Human Resources Development Agreements in Canada," CSLS Research Reports 2009-01, Centre for the Study of Living Standards.
    14. Fan, Jing-bo & Zhang, Cheng-gang, 2015. "A study of the rate of return to higher engineering education in China," International Journal of Educational Development, Elsevier, vol. 42(C), pages 106-114.
    15. Richard B. Freeman, 2010. "What Does Global Expansion of Higher Education Mean for the United States?," NBER Chapters, in: American Universities in a Global Market, pages 373-404, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    investment in tertiary education; labour market premia; Primes du marché du travail; Rendements de l’éducation; returns to education; éducation supérieure;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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