IDEAS home Printed from https://ideas.repec.org/p/oec/ecoaaa/591-en.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1787/031008650733
    Download Restriction: no

    References listed on IDEAS

    as
    1. Bruno Heyndels, 2001. "Asymmetries in the flypaper effect: empirical evidence for the Flemish municipalities," Applied Economics, Taylor & Francis Journals, vol. 33(10), pages 1329-1334.
    2. Nelson C. Mark & Masao Ogaki & Donggyu Sul, 2005. "Dynamic Seemingly Unrelated Cointegrating Regressions," Review of Economic Studies, Oxford University Press, vol. 72(3), pages 797-820.
    3. Mark Hallerberg & Jürgen von Hagen, 1999. "Electoral Institutions, Cabinet Negotiations, and Budget Deficits in the European Union," NBER Chapters,in: Fiscal Institutions and Fiscal Performance, pages 209-232 National Bureau of Economic Research, Inc.
    4. Timothy Goodspeed, 2002. "Bailouts in a Federation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(4), pages 409-421, August.
    5. Pedroni, Peter, 2004. "Panel Cointegration: Asymptotic And Finite Sample Properties Of Pooled Time Series Tests With An Application To The Ppp Hypothesis," Econometric Theory, Cambridge University Press, vol. 20(03), pages 597-625, June.
    6. Moon, H.R.Hyungsik Roger & Perron, Benoit, 2004. "Testing for a unit root in panels with dynamic factors," Journal of Econometrics, Elsevier, vol. 122(1), pages 81-126, September.
    7. Steven C. Deller & Craig S. Maher, 2006. "A Model of Asymmetries in the Flypaper Effect," Publius: The Journal of Federalism, Oxford University Press, vol. 36(2), pages 213-229.
    8. Mark P. Jones & Pablo Sanguinetti & Mariano Tommasi, 1999. "Politics, Institutions, and Public-Sector Spending in the Argentine Provinces," NBER Chapters,in: Fiscal Institutions and Fiscal Performance, pages 135-150 National Bureau of Economic Research, Inc.
    9. James M. Poterba & Kim Rueben, 1999. "State Fiscal Institutions and the U.S. Municipal Bond Market," NBER Chapters,in: Fiscal Institutions and Fiscal Performance, pages 181-208 National Bureau of Economic Research, Inc.
    10. von Hagen, Jurgen & Harden, Ian J., 1995. "Budget processes and commitment to fiscal discipline," European Economic Review, Elsevier, vol. 39(3-4), pages 771-779, April.
    11. Buettner, Thiess & Wildasin, David E., 2006. "The dynamics of municipal fiscal adjustment," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1115-1132, August.
    12. Melo, Ligia, 2002. "The Flypaper Effect under Different Institutional Contexts: The Colombian Case," Public Choice, Springer, vol. 111(3-4), pages 317-345, June.
    13. Teresa Garcia-Milà & Timothy J. Goodspeed & Therese J. McGuire, 2001. "Fiscal decentralization policies and sub-national government debt in evolving federations," Economics Working Papers 549, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2002.
    14. Peter Pedroni, 2000. "Fully Modified OLS for Heterogeneous Cointegrated Panels," Department of Economics Working Papers 2000-03, Department of Economics, Williams College.
    15. Wildasin, David E., 1997. "Externalities and bailouts : hard and soft budget constraints in intergovernmental fiscal relations," Policy Research Working Paper Series 1843, The World Bank.
    16. Joakim Westerlund, 2005. "Data Dependent Endogeneity Correction in Cointegrated Panels," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(5), pages 691-705, October.
    17. Levaggi, Rosella & Zanola, Roberto, 2003. "Flypaper Effect and Sluggishness: Evidence from Regional Health Expenditure in Italy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(5), pages 535-547, September.
    18. de Mello, Luiz Jr, 2000. "Fiscal Decentralization and Intergovernmental Fiscal Relations: A Cross-Country Analysis," World Development, Elsevier, vol. 28(2), pages 365-380, February.
    19. Stine, William F., 1994. "Is Local Government Revenue Response to Federal Aid Symmetrical? Evidence from Pennsylvania County Governments in a Era of Retrenchment," National Tax Journal, National Tax Association, vol. 47(4), pages 799-816, December.
    20. Gamkhar, Shama & Oates, Wallace E., 1996. "Asymmetries in the Response to Increases and Decreases in Intergovernmental Grants: Some Empirical Findings," National Tax Journal, National Tax Association, vol. 49(4), pages 501-12, December.
    21. repec:dau:papers:123456789/6159 is not listed on IDEAS
    22. Velasco, Andres, 2000. "Debts and deficits with fragmented fiscal policymaking," Journal of Public Economics, Elsevier, vol. 76(1), pages 105-125, April.
    23. Saikkonen, Pentti, 1991. "Asymptotically Efficient Estimation of Cointegration Regressions," Econometric Theory, Cambridge University Press, vol. 7(01), pages 1-21, March.
    24. Luiz R. De Mello Jr., 2001. "Fiscal Decentralization and Borrowing Costs: The Case of Local Governments," Public Finance Review, , vol. 29(2), pages 108-138, March.
    25. Stine, William F., 1994. "Is Local Government Revenue Response to Federal Aid Symmetrical? Evidence From Pennsylvania County Governments in a Era of Retrenchment," National Tax Journal, National Tax Association, vol. 47(4), pages 799-816, December.
    26. de Mello, Luiz, 2006. "Fiscal responsibility legislation and fiscal adjustment : the case of Brazilian local governments," Policy Research Working Paper Series 3812, The World Bank.
    27. Badi H. Baltagi & Chihwa Kao, 2000. "Nonstationary Panels, Cointegration in Panels and Dynamic Panels: A Survey," Center for Policy Research Working Papers 16, Center for Policy Research, Maxwell School, Syracuse University.
    28. Peter Pedroni, 2001. "Purchasing Power Parity Tests In Cointegrated Panels," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 727-731, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.

    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;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:591-en. 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: (). General contact details of provider: http://edirc.repec.org/data/edoecfr.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.