What is the private return to tertiary education?

Boarini, Romina; Strauß, Hubert

doi:10.1787/eco_studies-2010-5kmh5x51fv5f

Cited by 26 publications

(22 citation statements)

References 10 publications

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“…3 For comparisons of gross wage premia from tertiary education across countries, see Boarini and Strauss (2010). A recent paper studying returns to cognitive skills is Hanushek et al (2015).…”

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confidence: 99%

Self-selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics

Borjas

Kauppinen

Poutvaara

2018

The Economic Journal

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The Roy model has more precise predictions about the self-selection of migrants than previously realised. The conditions shown to result in positive or negative selection in terms of expected earnings also imply a stochastic dominance relationship between the earnings distributions of migrants and non-migrants. We test these predictions using the Danish full population administrative data. We find strong evidence of positive self-selection of emigrants in terms of pre-emigration earnings and residual earnings: the income distribution for the migrants almost stochastically dominates the distribution for the non-migrants. Decomposing the self-selection in total earnings reveals that unobserved abilities play the dominant role.A central finding in the economic literature on international migration is that emigrants are not randomly selected from the population of the source countries. The nature of the non-random selection affects the level and the distribution of welfare through two major channels. First, the skill distribution of migrants affects the wage structure in both sending and receiving countries (Borjas, 2003). A second effect takes place through the public sector. Immigration creates a fiscal surplus in the receiving country if and only if the net present value of the tax payments of immigrants exceeds the net present value of the costs they impose. Both the immigration of net recipients and the emigration of net payers pose a challenge to the public treasury (Wildasin, 1991;Sinn, 1997), while immigrants who are successfully integrated with the labour market can generate a substantial surplus (Dustmann and Frattini, 2014).Beginning with Borjas (1987), there has been a great deal of interest in deriving and empirically testing models that predict how migrants differ from non-migrants. Many of these studies rely on an application of the Roy model of occupational self-selection. As long as skills are sufficiently transferable across countries, the sorting of persons across countries is mainly determined by international differences in the rate of return to skills. A country like the US would then attract high-skilled workers from more egalitarian countries (i.e. countries offering relatively low rates of return to skills) and

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confidence: 99%

Self-selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics

Borjas

Kauppinen

Poutvaara

2018

The Economic Journal

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“…and the opportunity costs, in terms of foregone labour market earnings, associated with participation in tertiary education. Oliveira Martins et al (2009) show that higher internal rates of return -as estimated by Boarini and Strauss (2010) -lead to higher graduation rates in a panel of 20 OECD countries.…”

Section: Demand For Tertiary Educationmentioning

confidence: 99%

“…Second, the computation of an internal rate of return is very data intensive, which would limit the sample size. While Boarini and Strauss (2010) construct all-encompassing internal rates of return for 21 OECD countries, the data requirements and the complexity of the computations implied that estimates were only produced for a fairly limited sample of country-years, with the latest year for most countries being 2001. Thirdly, the simplified approach is more flexible in that it allows the impact of different demand components to deviate from the restrictions that an all-encompassing internal rate of return equation would impose.…”

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confidence: 99%

Determinants of Tertiary Graduations

Braconier

2015

OECD Economics Department Working Papers

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Complete document available on OLIS in its original formatThis document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2014)34 Unclassified English -Or. English ECO/WKP(2014)34 2 OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s).Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works. Comments on Working Papers are welcomed, and may be sent to the Economics Department, OECD, 2 rue André-Pascal, 75775 Paris Cedex 16, France.Comment on the Papers is invited, and may be sent to OECD Economics Department, 2 rue André Pascal, 75775 Paris Cedex 16, France, or by e-mail to eco.contact@oecd.org. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. © OECD (2015)You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for commercial use and translation rights should be submitted to rights@oecd.org ECO/WKP(2014)34 3 Abstract/Résumé Determinants of Tertiary GraduationsThis paper proposes and estimates a model of demand for and supply of graduations in tertiary education, which is then used to construct forward-looking scenarios for graduation rates by country. Consistent with evidence that economic returns to education have remained high in spite of rising educational attainment levels, the paper accords a great deal of attention to developments in gross earnings at various levels of the earnings distribution, though other factors are also accounted for. The analysis shows that demand for tertiary graduations increases in per capita incomes, wage differentials between high and medium earners, and PISA scores. Supply of graduations increases in tuitions and (to a lesser extent) government funding, but also in the share of students enrolled in private institutions and PISA scores. Based on the OECD 50-year scenarios for per capita incomes and earning inequalities (Braconier et al., 2014), the estimated model is used to generate future scenarios of demand for tertiary educa...

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“…For instance, the wage profiles of men and women are different; the genderspecific rates of unemployment are different; the length of their active lives are different; unemployment benefits are (or may be) different, due (mostly) to wage differences; public policies affect men and women in different ways. Gender-specific returns on education have been computed, using de la Fuente's model, for 21 OECD countries by Boarini and Strauss (2010). We also adopt his 2003 model to estimate the returns on education for men.…”

Section: Introductionmentioning

confidence: 99%

“…However, to study all the possible factors driving the gender gap in the rates of return, we take the de la Fuente model one step further by also considering some parameters related to maternity issues that can affect the incentive to invest in education and to participate to the labour market for women (see Del Boca, Locatelli, Pasqua and Pronzato (2003)). Hence, our model differs from that of Boarini and Strauss (2010) mainly in how it deals with women (and for the econometric procedure adopted in the estimate of the Mincerian coefficients that they use). The actual female work experience may be affected by maternity episodes and, consequently, by maternity leave and maternity-related monetary benefits (Mac (2003), Mahon (2002), Brewster and Rindfuss (2000), Blackburn, Bloom and Neumark (1993)).…”

Section: Introductionmentioning

confidence: 99%

The gender gap of returns on education across West European countries

Mendolicchio

Rhein

2014

International Journal of Manpower

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Purpose – The purpose of this paper is to study the gender specific private returns on education (RE) in Europe in a comparative perspective. The authors extend the model of de la Fuente (2003) by estimating the parameters by gender and introducing maternity leaves and benefits. The paper analyses the impact of the public policy variables evaluating the elasticities with respect to unemployment benefits, marginal and average tax rates, maternity leave and childcare benefits. Design/methodology/approach – The authors estimate the Mincerian coefficients, with the Heckman’ selection model, for 12 West European countries using the EU-SILC data. The authors then use them as input to calibrate the decision model. Findings – The RE of females tend to be higher than those of males in all the Europeans countries but Germany, the Netherlands and Sweden. The gender gap can be explained mainly by the wage premia and labour income taxes which more than compensate the negative effects on females’ returns triggered by higher unemployment rates and maternity-related benefits. Practical implications – The tax system has the most pronounced effect on RE. An increase in the marginal tax rates has a negative impact. An increase in the average tax rates can have a negative or positive impact, depending on the progressivity of the tax system. An increase in unemployment benefits and maternity or child-care benefits has a negative but fairly small impact. Social implications – The analysis considers just one dimension of maternity related policies: the effect on RE and differences across gender. These policies may have aims which are beyond the scope of this paper, for instance to increase fertility. From this viewpoint, the small values of the elasticities presented are reassuring in that they suggest that they can be implemented at a fairly small cost in terms of investment in human capital. Originality/value – The authors compute the RE using a model which allows us to take into account and assess the significance of relevant variables: wage premium, income tax, some public transfers and benefits, costs of the investments. Moreover, the authors estimate the wage premia using relatively recent EU-SILC data. Finally, the paper compares 12 EU countries spanning quite different labour market conditions and institutions.

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What is the private return to tertiary education?

Cited by 26 publications

References 10 publications

Self-selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics

Self-selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics

Determinants of Tertiary Graduations

The gender gap of returns on education across West European countries

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