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Schooling returns, schooling decisions and educational finance

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  • Colm Harmon

Abstract

Given the presence of significant returns to education, it would seem logical to query why individuals choose to leave school early. This paper examines the evidence on this issue, dealing with both methodological and evidence-based findings. Drawing on existing research in the area of schooling returns, the evidence and deficiencies of the literature are explored in an effort to quantify the scale of the private return to education. The schooling decision is subsequently examined more closely, so as to investigate the effect of variables such as family income on that choice. Proposed educational finance solutions are then surveyed. Specifically, this paper reports on an experimental approach in the UK, which pays allowances to households and individual students for participation in education, thus reducing the opportunity cost of staying on at school. Finally, estimates are presented, based on an analysis of non-experimental UK data, of the probability of early school leaving, conditional on named variables.

Suggested Citation

  • Colm Harmon, 2002. "Schooling returns, schooling decisions and educational finance," Open Access publications 10197/669, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:oapubs:10197/669
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    File URL: http://hdl.handle.net/10197/669
    File Function: Open Access version, 2002
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    References listed on IDEAS

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    1. Stephen V. Cameron & James J. Heckman, 1998. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 262-333, April.
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    7. Plug, Erik & Vijverberg, Wim P., 2001. "Schooling, Family Background, and Adoption: Does Family Income Matter?," IZA Discussion Papers 246, IZA Network @ LISER.
    8. 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 1278-1286, December.
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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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