Returns on Education: Are They Worth It?

Returns on Education: Are They Worth It?

Economics is a subject studied by many students bound and abroad and it is used to research and discuss many topics and subjects of concern for economic health of nations. This paper summarizes papers written by economic professionals that have put in extensive research on the subject of returns to education. The questions that arise by many college students and their parents are: "Is a college education a good investment?” Economists and people alike ask: “Is the investment in to human capital really worth it, are the returns economically beneficial to the governments, nations people, investors, and the lives of the students themselves, and how accurate are the measurements of the results from this investment?” Here we will discuss the topic of returns to education with social aspects, measurement issues, and macroeconomic benefits, and policy implications.

A compiled body of statistical analysis indicates that, on average, college graduates have higher lifetime earnings than high school graduates. The rate of return to a college degree, however, is affected by a variety of factors, including: choice of college major, choice of occupation, labor market conditions, college quality, and individual ability. There are, however, several problems that make it difficult to measure the return to education for an individual. The human capital model introduced by Theodore W. Schultz and expanded by Gary S. Becker, et al. suggests that education raises a worker's productivity. They express higher pay received by college graduates is the result of acquiring skills and knowledge to increase their value in the labor markets, and these skills (a direct effect of education) generally results in higher productivity of workers. Increases in productivity frees up resources for new technology, new businesses, and new wealth, increasing economic growth. Education is classified as a “public good,” so society and the individual should...