Returns from education, Microeconomics

Returns from Education

Monetary benefits from education are called as returns. Such benefits accruing to an individual are called as private returns. The sum of all private returns together with the taxes on income paid by individuals is known as social returns. In the context of education, costs for various courses are first calculated. Returns to these courses over a life time are then computed based on factors like total years of working (i.e. working span), expected or average returns or earnings, etc.

The life time returns are then calculated for unit costs or per unit of expenditure. Two techniques are followed to calculate rates of return to different levels and forms of education. They are: the Net Present Value (NPV) technique and the Internal Rate of Return (IRR) technique. There have been a large number of studies using particularly the IRR technique to compute the economic value of a variety of educational courses. A comprehensive review of these studies was made by Psacharopoulos and Hinchcliffe in 1973 and again updated in 1985. As per this international update on findings of studies on rates of return from sixty countries, the following inferences have been drawn.

a) Social rates of return are lower than private rates of return;
b) Social rates to primary education are higher than those to secondary and higher education;
c) Social rates for developing countries are higher than those for developed countries;
d) Social rates on investments in education are higher than social rates on investment in physical capital (industry, trade, etc) for developing countries.

Posted Date: 12/17/2012 4:50:31 AM | Location : United States







Related Discussions:- Returns from education, Assignment Help, Ask Question on Returns from education, Get Answer, Expert's Help, Returns from education Discussions

Write discussion on Returns from education
Your posts are moderated
Related Questions
Securitization: A process in that financial relationships (like loans) are converted into financial securities or assets (like bonds) that can be bought and re-sold in securities m

DEMOGRAPHIC PROFILE: A demographic profile of India can be prepared out of the data collected by the office of the Registrar General of India who is the responsible authority


1. What are externalities? Give an example of positive and negative externality and explain why the market outcomes are inefficient in the presence of externalities? 2. What are

-1- ASSIGNMENT #1 The demand function for Product X is given by: Qdx = 80- 2Px- 0.05P²x -0.2Py + 4Pz + 0.01I+ 2A Where: Px Price of good X $120.00 Py Price of related good y $100.0

There are two individuals in town, one is high risk and the other is low risk.1 The probabilities of having an accident for the low risk individual and high risk individual are p

Consumers purchase a house or multiple dwellings for a number of reasons. But what is the rationale behind their decision to buy and/or sell a house, flat or apartment? Do consumer

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Telecommunications industry in South Africa