External return to education in Europe
Languages of publication
In the literature, social return to education is defined as the sum of human capital return and external return. The novelty of this study is that it provides an international comparison of external return to education. Many authors claim that the social return rate exceeds the pure technical rate of return by a considerable margin. However, measurement of social return is challenged methodologically and by data problems. The approach employed in this study is based on comparative advantage theory which allows control for potential endogeneity and self-selection into different streams of education. External return was found to be positive in all European countries although magnitudes varied. The external return was greater in smaller economies where there was a smaller proportion of highly educated people.
- Acemoglu, D. and Angrist, J. (1999). How large are the social returns to education? Evidence from compulsory schooling laws. NBER Working Paper: 7444. Retrieved from http://www.nber.org/papers/w7444.pdf?new_window=1
- Becker, G. (1976). The economic approach to human behavior. Warszawa: PWN.
- Bordieu, P. (1986). Forms of capital. In J. Richardson (ed.), Handbook of theory and research for the sociology of education (pp. 241–260). Westport, CT: Greenwood Press.
- Brunello, G., Comi, S. and Lucifora, C. (2000). The returns to education in Italy: a new look at the evidence. IZA Working Paper: 130. Retrieved from http://ftp.iza.org/dp130.pdf
- Bils, M. and Klenow, P. (2000). Does schooling cause growth? American Economic Review, 90(5), 1160–1183.
- Blundell, R., Dearden, L. and Sianesi, B. (2005). Evaluating the impact of education on earnings in the UK: models, methods and results from the NCDS. Journal of the Royal Statistical Society. Series A, 168, 473–512. doi: 10.1920/wp.ifs.2003.0320
- Fuente, A., de la (2003). Human capital in a global and knowledge-based economy. Part 2: assessment at the EU country level. Retrieved from http://ec.europa.eu/social/BlobServlet?docId=1940&langId=en
- Harmon, C., Oosterbeek, H. and Walker, I. (2002). The returns to education: a review of evidence. Center for Economics of Education, Working Paper. Retrieved from http://cee.lse.ac.uk/ceedps/ceedp05.pdf
- Heckman, J. J. and Klenow, P. (1997). Human capital policy. Chciago, IL: University of Chicago.
- Heinrich, G. and Hildebrand, V. (2005). Returns to education in the European Union: a reassessment from comparative data. European Journal of Education, 40(1), 13–34.
- Kirby, S. and Riley, R. (2008). The external returns to education: UK evidence using repeated cross-sections. Labour Economics, 15(4), 619–630.
- Kreuger, A. and Lindahl, M. (2001). Education for growth: why and for whom? Journal of Economic Literature, 39, 1101–1136.
- Mincer, J. (1974). Schooling. Experience and earnings. New York, NY: Columbia University Press.
- Moretti, E. (2004). Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data, Journal of Econometrics, 121, 175–212.
- OECD (2000). Education at a glance: OECD indicators. Paris: OECD Publishing.
- Psacharopoulos, G. and Patrinos, H. (2002). Returns to investment in education: a further update. World Bank Policy Research Working Paper: 2881. Retrieved from http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2881
- Rauch, J. (1993). Productivity gains from geographic concentration of human capital: evidence from the cities. Journal of Urban Economics, 34(3), 380–400.
- Sakellariou, C. and Maysani, R. (2004). Lucas type external effect of human capital: strong evidence using microdata. Applied Economic Letters, 11(6), 343–346.
- Topel, R. (1999). Labour markets and economic growth. In O. Ashenfalter and D. Card (eds.), Handbook of Labour Economics. North Holland.
- Willis, R. and Rosen, S. (1979). Education and self selection. Journal of Political Economy, 87(5), S7–S36.
Publication order reference