ERIC Number: ED311762
Record Type: RIE
Publication Date: 1988-Jul
Reference Count: N/A
Social Internal Rates of Return to College Education in the United States: 1969, 1974, 1978, and 1982. Working Paper in Economics.
Cohn, Elchanan; Hughes, Woodrow W., Jr.
The issue of rates of return to educational investment over time is discussed, noting that the examination of this subject enjoyed its heyday in the middle and late 1970s. A longitudinal examination of internal rates of returns to college education for different time periods is included. Some of the reasons for reexamining the issue are: the decline in rates of return was due in part to a large growth of the college-educated cohort size in the early 1970s, the business cycle may also affect the rate of return, and since 1974, the business cycle has gone through a complete cycle (from regression to peak to recession and to more expansion); and if educational expenditures are considered as investment, then the yield should behave similarly to more conventional investment. The model used in the study is a two-stage simultaneous equation system which corrects for self-selectivity bias. Samples for the various years are drawn from the Panel Study of Income Dynamics conducted by the Survey Research Center of the University of Michigan. Results include the following: the declining rates of return over the first three time periods are consistent with the notion that as schooling expands, the social rate of return should fall; the rates of return to education should follow the same general pattern as investment in other types of assets; and the rate of return to educational investments has policy implications. Tables are included. Contains 19 references. (SM)
Publication Type: Reports - Descriptive
Education Level: N/A
Authoring Institution: South Carolina Univ., Columbia.