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
Ask questi‘Social welfare functions embody a normative conception of the relative importance of equity and efficiency’. With the aid of diagrams, illustrate and explain this propos

draw the following diagrams and explain their shapes: the production possibilities frontier a demand curve the demand curve for a firm in perfect competition the demand curve for a

The Industry's Long-Run Supply Curve * Long-Run Elasticity of Supply   1) Constant-cost industry Long run supply is horizontal Small increase in price will induc

discuss utility

GDP Growth, Employment and Poverty: The advocates of economic reforms point out that the reform process has the potential of accelerating economic growth. After the teething t

What is cost analysis? Cost–benefit analysis known as CBA, sometimes known as benefit–cost analysis BCA, is a systematic process of calculating & comparing profit and costs of a pr

Market intervention by government Government intervenes in various degrees in different countries. Free economy is almost non-existent in the modem world. In real world, the form,

Factors that calculate price elasticity of demand: The proportion of Income spent on the Commodity If the price of a good is relatively low such the expenditure on it is a

The distinction between supply and the quantity supplied is best made by saying that

Slutsky's Theorem: Graphical Presentation  We prove here that own price effect is the sum of own substitution effect and income effect for a price change, which is known