Publication: Returns to Investment in Education: A Decennial Review of the Global Literature
Loading...
Date
2018-04
ISSN
Published
2018-04
Author(s)
Psacharopoulos, George
Editor(s)
Abstract
Returns to investment in education based on human capital theory have been estimated systematically since the 1950s. In the 60-plus year history of such estimates, there have been several compilations in the literature. This paper reviews and highlights the latest trends and patterns based on a database of 1,120 estimates in 139 countries. The review shows that the private average global rate of return to one extra year of schooling is about 9 percent a year and very stable over decades. Private returns to higher education have increased over time, raising issues of financing and equity. Social returns to schooling remain high, above 10 percent at the secondary and higher education levels. Women continue to experience higher average rates of return to schooling, showing that girls' education remains a priority. Returns are higher in low-income countries. Those employed in the private sector of the economy enjoy higher returns than those in the public sector, lending support to the productive value of education.
Link to Data Set
Citation
“Psacharopoulos, George; Patrinos, Harry Anthony. 2018. Returns to Investment in Education: A Decennial Review of the Global Literature. Policy Research Working Paper;No. 8402. © World Bank, Washington, DC. http://hdl.handle.net/10986/29672 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication Dynamic, High-Resolution Wealth Measurement in Data-Scarce Environments(Washington, DC: World Bank, 2025-02-06)Accurate and comprehensive measurement of household livelihoods is critical for monitoring progress toward poverty alleviation and targeting social assistance programs for those who most need it. However, the high cost of traditional data collection has historically made comprehensive measurement a difficult task. This paper evaluates alternative satellite-based deep learning approaches using detailed household census extracts from four African countries to accelerate progress toward comprehensive, fine-scale, and dynamic measurement of asset wealth at scale. The results indicate that transformer architectures solve multiple open measurement problems, by providing the most accurate measurement of local-level variation in household asset wealth across countries and cities, as well as changes in household asset wealth over time. Experiments that artificially restrict data availability show the model’s ability to achieve high performance with limited data. The proposed approach demonstrates the promise of combining satellite imagery, publicly available geo-features, and new deep learning architectures for hyperlocal and dynamic measurement of wealth in data-scarce environments.Publication Energy Prices, Energy Intensity, and Firm Performance(Washington, DC: World Bank, 2025-02-20)This paper estimates the effect of electricity prices on firm performance, focusing on firm productivity, sales, and employment. Using the World Bank Business Pulse Survey data for a sample of 24 emerging markets and developing economies during 2019–23, the paper estimates the average effect and the heterogeneous effects across industries of varying energy intensity and firms that implemented (or did not implement) energy efficiency measures (self-reported in the Business Pulse Survey). The findings show that increasing electricity prices by 1 percent reduces employment at firms in energy-intensive industries that did not adopt energy efficiency measures by about 1.5 percent, compared with similar firms in energy-non-intensive sectors. In parallel, energy-intensive firms may increase sales and productivity but this result is robust to all alternative specifications. Firms may increase sales while reducing employment after energy price hikes, by adopting energy-efficient technologies and by passing through costs to consumers in inelastic markets while reducing employment in energy-intensive sectors due to cost pressures. These results highlight the adoption of energy efficiency measures by firms as an important employment protection policy action to cope with future volatility in energy (electricity) prices.Publication Dynamic Effects of Fiscal Rules(Washington, DC: World Bank, 2025-02-19)Fiscal rules have been shown to support fiscal discipline by improving government budget balances and restraining the growth of debt. However, questions remain about what enhances their effectiveness and how certain conditions help to build the credibility needed for their survival and success. Using data from 108 countries between 1984 and 2012, this paper studies the dynamic effects of fiscal rule adoption. It shows that although fiscal rules generally improve the primary balance, their effects depend on the time horizon under consideration and the context of adoption. In advanced economies and countries with strong political institutions, the effects strengthen over time. Conversely, in emerging markets and developing economies—especially those with weaker institutions—their impact tends to fade as time passes. The findings highlight the critical role of economic conditions and consensus building at the time of adoption. Specifically, fiscal rules introduced in times of economic hardship or under highly concentrated political power are often less effective in the medium term.Publication Does Free Sound Too Cheap?(Washington, DC: World Bank, 2025-02-12)This study conducted a randomized experiment to improve participation in a youth employment program in Côte d'Ivoire by testing text message outreach methods. Sending text messages highlighting that the program was free only to eligible youth had no impact, but messages sent to both youth and trusted contacts led to reduced enrollment. This negative effect was smaller for women, and 0 when their contact was also female. Qualitative findings suggest that distrust among unfamiliar contacts contributed to this decline. The study highlights the importance of tailoring communication strategies in job training programs to increase effectiveness, considering recipients’ relationships and trust.Publication Decarbonization in MENA Countries(Washington, DC: World Bank, 2025-02-14)This paper empirically examines the multiple impacts of alternative, major fiscal instruments on decarbonization in countries in the Middle East and North Africa. It also examines the effects of decarbonization pathways on decarbonization, using a database covering 41 countries, including countries in the Middle East and North Africa region. The analysis uses several methods to compare and contrast the findings and test their robustness. These new estimates contribute to the literature seeking to understand the pros and cons and effectiveness of various policy instruments in promoting decarbonization, with particular focus on the Middle East and North Africa region. The principal findings include the following. Oil subsidies among the region’s oil producers strongly and positively impact higher carbon dioxide emissions. This effect seems to work through the energy consumption path. Even after controlling the consumption effect, there remains a direct net effect of subsidies on carbon dioxide, likely arising from other sources such as manufacturing. Comparing three groups—all 41 countries, only countries in the Middle East and North Africa, and only oil producers in the Middle East and North Africa—the adverse effect of oil subsidies on carbon dioxide emissions matters only for oil producers in the Middle East and North Africa, not the other two groups. Flaring contributes to carbon dioxide emissions for oil producers in the Middle East and North Africa. Oil subsidies do not have a significant effect on short-run or long-run economic growth. Thus, reducing subsidies does not adversely impact economic growth. This is true for all countries, including oil exporters, in the Middle East and North Africa.