The full social returns to education : estimates based on countries' economic growth performance

This paper reports new estimates of the social returns to education, using countries' economic performance during 1960-85 to capture the externalities from education. The results confirm the social profitability of investing in education but indicate that the returns by level of education are sensitive to countries' economic status. The authors distinguish between investments to maintain existing coverage and investments to expand it. Their findings relate mainly to the second type of investment decision in the context of observed initial gross enrollment ratios on the primary, secondary, and higher education levels for each category of low-income, middle-income, and high-income countries. Using this data, the authors maintain that the results suggest that low-income countries benefited most from investments to expand primary education, while in middle-income countries, it was investments to expand secondary education that brought the highest social returns. In the high-income countries, investing to expand coverage in higher education yielded the best returns. Investments with poor social returns include expansion of higher education in low- and middle-income settings and expansion of secondary education in high-income settings.