The economic returns to higher education in twenty-five countries

TLDR: In this paper, the meaning of the phrase "rate of return to investment in higher education" is explained and relevant evidence in twenty five countries is reviewed, and a distinction is drawn between the returns enjoyed by the individual and those accrued to the society as a whole.

Abstract: During the last decade empirical estimates have become available of the yield of educational capital in a number of countries. In this article the meaning of the phrase ‘rate of return to investment in higher education’ is explained and then the relevant evidence in twenty five countries is reviewed. A distinction is drawn between the returns enjoyed by the individual and those accrued to the society as a whole, and the results of the comparison are discussed in terms of their implications for public subsidies towards higher education. Moreover, a comparison is attempted between the returns to physical capital and the returns to investment in higher education at given stages of economic development. The result of the comparisons is that in less developed countries the returns to investment in education are well above the returns to physical capital whereas the returns to university education in advanced countries are of the same order of magnitude or even less than the returns to physical capital.