On the Measurement of Private Rates of Return to Education

Stefan C. Wolter and Bernhard A. Weber
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Bernhard A. Weber: Uni Bern

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 1999, vol. 218, issue 5+6, pages 605-618

Abstract: In many countries on the European continent, it is feared that public funding of tertiary education (university and non-university) leads to an undesirable redistribution of income "from the bottom up". The calculation of private rates of return is one way of answering this and other questions. This article proposes a new model for calculating private rates of return to education, which on the one hand takes into account the influence of existing wage structures and such institutional factors as the cost of education and the fiscal system, and on the other hand produces results that are relatively easy to interpret at the economic policy level. The first empirical results for Switzerland indicate that once educational costs have been deducted, wage-earning advantages would be too insignificant for it to be possible to speak of redistribution of income "from the bottom up" in any meaningful way.

Keywords: rates of return to education; human capital theory; labour market wages (search for similar items in EconPapers)
JEL-codes: H0 H52 I22 J31 (search for similar items in EconPapers)
Date: 1999
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