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New Estimates of the Private Rate of Return to University Education in Australia

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  • Jeff Borland

    (Department of Economics and Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

The objective of this study is to provide new estimates of the average private rate of return to a university degree in Australia. It considers the case of a hypothetical individual who has completed high school in 2000, and is making a decision on whether to begin a three-year bachelor degree or to enter the workforce in 2001. For the 'base case' scenario of a 'representative' individual making a decision on whether to attend university, the estimate of the average private rate of return to a three-year bachelor degree is 14.5 per cent. Underlying this estimate is a lifetime net monetary gain of $380,958 from undertaking the degree (assuming a zero rate of discount). Estimates of the rate of return to a bachelor degree are fairly robust to alternative scenarios. Rates of return do however show a wide variation across the field of qualification categories. The estimated returns are relatively high for business and administration, and engineering graduates, and relatively low for graduates in the fields of society and culture, and science.

Suggested Citation

  • Jeff Borland, 2002. "New Estimates of the Private Rate of Return to University Education in Australia," Melbourne Institute Working Paper Series wp2002n14, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2002n14
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2002n14.pdf
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    References listed on IDEAS

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    1. David Johnson & Roger Wilkins, 2003. "The Net Benefit To Government Of Higher Education: A “Balance Sheet” Approach," Economic Papers, The Economic Society of Australia, vol. 22(2), pages 1-20, June.
    2. Cotton M. Lindsay, 1973. "Real Returns to Medical Education," Journal of Human Resources, University of Wisconsin Press, vol. 8(3), pages 331-348.
    3. Jeff Borland, 1996. "Education and the Structure of Earnings in Australia," The Economic Record, The Economic Society of Australia, vol. 72(219), pages 370-380, December.
    4. Leo Maglen, 1994. "Education Expansion And The Private Returns On A University Degree," Economic Papers, The Economic Society of Australia, vol. 13(4), pages 57-71, December.
    5. Chapman, B & Salvage, T, 1997. "The Consequences of Recent Changes in Financing for Australian Higher Education," CEPR Discussion Papers 367, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    6. repec:bla:ecorec:v:72:y:1996:i:219:p:370-80 is not listed on IDEAS
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    Cited by:

    1. Michel Dumont, 2008. "Working Paper 22-08 - Wages and employment by level of education and occupation in Belgium," Working Papers 0822, Federal Planning Bureau, Belgium.
    2. Michael Coelli & Roger Wilkins, 2009. "Credential Changes and Education Earnings Premia in Australia," The Economic Record, The Economic Society of Australia, vol. 85(270), pages 239-259, September.
    3. Andrew D. Colegrave, 2006. "Why Study at a Mature Age? An Analysis of the Private Returns to Universtity Education in Australia," Economics Discussion / Working Papers 06-11, The University of Western Australia, Department of Economics.
    4. Gene Tunny, 2006. "Educational attainment in Australia," Economic Roundup, The Treasury, Australian Government, issue 2, pages 1-9, May.
    5. Nicholas Biddle, 2013. "Necessary but not sufficient? Youth responses to localised returns to education in Australia," Education Economics, Taylor & Francis Journals, vol. 21(1), pages 92-104, February.
    6. Schurer, Stefanie & de New, Sonja C. & Leung, Felix, 2015. "Do Universities Shape Their Students' Personality?," IZA Discussion Papers 8873, Institute of Labor Economics (IZA).
    7. Fieger, Peter, 2015. "Determinants of completions and completion deficits in VET: Evidence from Australia," MPRA Paper 66052, University Library of Munich, Germany.
    8. T. Kiss, Judit, 2012. "A felsőoktatás mint emberitőke-beruházás költségvetési és egyéni megtérülési rátáinak alakulása Magyarországon (1999-2010) [Fiscal and private rates of return to tertiary education as an investment," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1207-1232.
    9. James Zuccollo & Sholeh Maani & Bill Kaye-Blake & Lulu Zeng, 2013. "Private Returns to Tertiary Education - How Does New Zealand Compare to the OECD?," Treasury Working Paper Series 13/10, New Zealand Treasury.

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