What is the payoff to education? The Institute for Employment
Research (IAB) published a report tracking yields on education for 12
Western European countries. Taking into account costs associated
with education, every extra year in school or university adds 6,07%
to future income.
Steep returns in Portugal, weak in the
Netherlands
In Portugal (8,76%), Luxembourg (8,66%), Ireland (8,37%) and
Spain (7,19 %) studying longer pays particularly well. France
(6,06%) and Germany (5,07%) have average and below average yields
to education. The lowest return is realized in the Netherlands
(3,65%) and Sweden (3,99%).
The effect is overall larger for women (6,29%) than men (5,85%)
which the researchers attribute to the phenomenon that low
qualified women usually have particularly badly paid jobs. Due to
family and household obligations they are not able to take on
better paid positions that involve shift or nightshift work.
Complete picture on return to education
Structural differences in labor markets explain some part of the
variations in those 12 countries. Qualified women in Sweden for
instance tend to work for the public sector where wages are low,
while in the Netherlands part-time work is popular among women.
The report indicates both Mincer coefficients and yield to
education for all cases. Mincer coefficients refer to a statistical
growth in income from being better educated. Yield to education by
contrast also accounts for progressive tax payments from this
greater income and overall job market participation.
Costs to education are determined through direct costs (e.g.
tuition fees) and opportunity costs. The latter are incurred if an
individual spends time studying instead of earning money from
entering the job market right away.
(source: IAB)