Underestimating Aggregate Rates of Return to Education
Abstract
Identifies an error in the measurement of private rates of return to aggregate levels of education. When education is viewed as a continuous variable, the estimated rate of return is to an incremental year of schooling. However, rates of return are often estimated for aggregate levels of education such as the secondary and university levels. When an aggregate level has sub‐levels, such as bachelors′ and masters′ for the university level, the conventional procedure underestimates the rate of return to the aggregate level due to the dominance of up‐front costs in the discounting procedure used to compute rates of return.
Keywords
Citation
Khan, S.R. (1993), "Underestimating Aggregate Rates of Return to Education", International Journal of Manpower, Vol. 14 No. 8, pp. 17-22. https://doi.org/10.1108/01437729310044014
Publisher
:MCB UP Ltd
Copyright © 1993, MCB UP Limited