People who have completed tertiary education can generally expect to earn more than those who don’t. But governments and societies benefit from these people’s investments as well.
On average across OECD countries, public investment in an individual’s tertiary education is $39,000 higher than that for an individual’s upper secondary or post-secondary education. Yet, in most countries, the public returns from tertiary education are substantially higher than those from upper secondary or post-secondary non-tertiary education, thanks to the higher taxes and social contributions that flow from the higher incomes of those with tertiary qualifications. On average across OECD countries, the public net return from an investment in tertiary education is over $100,000 for a man and over $57,000 for a woman. After direct costs, foregone earnings, and public grants, are taken into account, the public benefits from a man in tertiary education are four times higher than the public costs, and from a tertiary-educated woman, more than two times higher.
Overall, differences in returns to both the individual and the public sector depend on how equal wages in that country are. The Nordic countries and New Zealand, for example, have small wage differences and consequently lower public returns to higher education. The former have generally offset these lower returns by providing a higher-education system that is almost free of charge and through a generous student-grant system.
© OECD Observer No 295 Q2 2013
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