ESTIMATING PRIVATE RATE OF RETUN ON HIGHER EDUCATION IN PAKISTAN

Malik Fahim Bashir (), Muhammad Mazhar Iqbal () and Khalid Zaman ()
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Malik Fahim Bashir: Department of Management Sciences, COMSATS Institute of Information Technology Abbottabad, Pakistan
Muhammad Mazhar Iqbal: Department of Economics, Quaid-i-Azam University, Islamabad, Pakistan
Khalid Zaman: Department of Management Sciences, COMSATS Institute of Information Technology, Abbottabad, Pakistan

Review of Economic and Business Studies, 2011, issue 7, 179-197

Abstract: The current study focuses primarily on estimating private rate of return for two successive degrees of higher education in Pakistan namely M.Phil and PhD. Sensitivity analysis on calculations of the average private rate of return to university education is undertaken. This involves checking how estimates of the rate of return vary with key assumptions used to calculate the rate of return. Further, to estimate internal rate of returns, explicit & implicit costs and earnings on BPS-2005 scale to which a degree holder is eligible to apply. Estimates of the rate of return to a university degree would provide one measure of the net monetary benefits from higher education. Result reveals that private rate of return is extremely low for M.Phil and PhD degrees that can explain dismay situation of higher education in the country. To boost higher education, private rate of return must increase that can be achieved effectively either by raising pay scales, or by giving interest-free scholarships or by increasing retirement age.

Keywords: Education; Human Capital; Economic Growth; Cost Benefit Analysis; Public Sector; Pakistan (search for similar items in EconPapers)
JEL-codes: I21 I23 O1 (search for similar items in EconPapers)
Date: 2011
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