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I was surprised to see that the screening hypothesis was rigorously tested and found to not be a significant contributor to earnings. I was not surprised that productivity gains were responsible for increased wages, but thought that screening might play a role. I was confused as to why the authors had a methods section that did not really discuss methods in the traditional sense as this is not an experimental study. I wonder if the reason that the returns to higher education are staying constant even though each new college graduate would seem to be a diminishing return is that college graduates being able to work with more college graduates increases their productivity. The author suggests that the relative stability of the productivity of higher education is due to increased demand for it, and I am sure that makes up most of the picture, but wonder about the other piece I just mentioned. I found it intriguing that Latin American and sub-Saharan Africa saw the highest returns to education. I am also intrigued what part school quality has to play in this story, but understand that this is incredibly difficult to measure, especially when conducting meta-analyses on hundreds of studies. At the end of the paper the authors mention looking into that, but I want to leave this comment in my post. I was not surprised to see that returns to education of girls were higher than for boys. I am also curious how a lot of this data was collected, mainly in developing countries that might have very lax laws regarding public education attendance and poor record keeping. I am curious how externalities are measured/quantified as I imagine that would be pretty nebulous regarding returns to education.

Teddy Bentley

From this study, there seems to be much more returns when there is a difference between education level and the education that is received. For example, low income students are getting a higher return at every level of education than high income students. That is likely because the education level of low income students is much lower, so the exposure to any sort of education is likely to make a very big difference in their ability to create returns. This is consistent in the findings with secondary and higher levels of education as the rate of return drops off from primary to the next levels. Something that wasn’t mentioned in this article was the effect of higher quality education. That is likely because quality of education is very hard to measure, especially on a global level. However, it would be very interesting to test this theory with rates of return. I think there should be something said about the quality of education when looking back at my original conclusion drawn from this article. When there is a big difference between the education level of the student and the education being received, there should be a higher rate of return. If students that get a great primary education aren’t benefitting from secondary school as much as someone with a bad primary education, then there should be an emphasis on increasing the quality of that secondary education. This would be a focus as education becomes more universal but it is crucial when trying to combat the diminishing returns of more education.

The social returns must be high when taking in externalities. Refer to the graph w one worker being more effective when other gets educated.
When examining social returns, I think they are so low because of the externalities, which is mentioned in the article. This brings me to the graph where if you increase the quality of one worker, the wages of another increase. As one person is educated better, it will increase the productivity of another student. These externalities aren’t taken into account in this study I would presume and that would dramatically increase the social returns to education. Lastly, education is done in a social setting. Gaining relationships and connections that people get in school is an incredibly important social return that should be accounted for.

Claire Jenkins

This paper by Psacharopoulos and Patrinos builds upon our many previous class discussions about the importance of investments in education in development. As I was reading this paper, I became even more disappointed by the fact that many countries still fail to make the necessary investments in education despite all of the empirical evidence suggesting the wide array of benefits from educational investments. Human capital is a critical piece to human development, yet it is still defined by underinvestment. It is shocking that, despite this clear evidence of the positive private and social returns to education, investments in education is not more of a priority (it should be of top priority). These statistics about the returns to education should serve as a catalyst for countries across the world to pump investments into education, yet we still see little to no investment in many countries. Over the 70 years looked at here, the private rate of return to an additional year of schooling is 8.8%. We also see that returns to education are higher for low income countries. We have learned in class that these low income countries have very low levels of human capital, therefore, these investments in education significantly positively impact their lives through improving their human capital and providing increased access to opportunities. It is extremely disappointing and shocking to me that policy makers across the globe have not shown more of an urgency to increase investments in education, especially in low income countries, despite these overwhelming facts about the positive benefits. The benefits of this increased education go beyond higher productivity and higher earnings for people; there are various social benefits that we have extensively talked about in class that make these investments all the more worthwhile. Investments in education for low-income countries especially could push them out of the low-level equilibrium trap and significantly improve their quality of life. Something that made me feel even more strongly about this point was the fact that the social rates of return reported in this paper were underestimates of the true returns. The authors state that, "Monetizing the value of just one externality of education - reduced mortality found that the social rate of return to investment in one extra year of schooling in low-income countries is 16%, relative to 11% based solely on earnings differentials." It is clear that there are very high returns to education and that policy makers need to take that as a signal to focus on education as policy initiative.

In addition, I was particularly drawn to the discussion about female returns to education as a result of our discussions last week about women's role in development. The authors explained that the returns to female education are higher than those to male education, by about 2%. This finding just reiterates the obvious point that we have mentioned multiple times in class and have read in pieces such as Duflo's paper: educating women should be a top priority among development policies.

Chaz Cunningham

I liked how this paper began with the primary conclusions it drew from several empirical studies such as that the highest returns of education come from primary education and womens education, as well as prioritizing education in low income countries. Furthermore, I found it interesting how it suggested two approaches to this relationship between education and earnings. This is whether education creates greater productivity leading to more earnings or the screening approach where employers select people with greater qualifications (education wise). I think the real relationship lies at a median between both of these. We can see this in present time with the fact that we do go to college to increase our skills and productivity, but there is also a stigma behind where you go to school and the greater reputation one can get from a prestigious instituion versus a lesser-known school. It seems realistic to say that two people with the same exact skills and abilities are not exactly on the same tier in an employers view if one has graduated from a much higher qualified institution.
In addition, I really found this idea of the race between technology and education to be intersting. If technology is increasing at a faster rate than the supply of education of human capital, then then the rates of return on education aren't as significant. I thought the author described it well by saying "the demand for skill is outpacing the growth in supply of skills". This point is further exemplified in looking at returns on education in lower income countries and wealthier nations. In a lower income country, the skill demand isnt as high, so those who can meet and exceed the demand for skill and education will see much greater returns in earnings than someone working in a highly developed country. This leads me to only agree with the suggestion that increasing human capital (education) is a must in developing countries. Earnings returns on education will be more evident and as a result can stimulate growth in overall technology and capital.
Lastly, I think the social returns on education was an important piece to include. I'm not sure why they first ignored externalites of education in their analysis, but I do think mortality rates was an important benefit of education returns to include. I do think some larger effects like a grounded political ruling and changes in crime rates would also be effective in emphasizing positive social returns on education.

Ben Barbour

The paper by Psacharopoulos and Patrinos has a lot of correlations with the topics that we talk about in class. Namely, the finding that women's education has higher returns than men’s and that we should aim to give priority to the education of girls. This has been a common talk in class and seems to be well known about in the economics world. Womens education has helped countries, like South Korea, and should continue being talked about until other countries realize how important it is for economic development. Besides this and the other findings related to education and rates of return, I was more interested in the short section on Chile and Colombia. They mentioned the voucher system in 1981 but did not talk about how Chile essentially has free public college nowadays. This is important to the paper because free education, while increasing absolute incomes for most people, does increase inequality often. Because education is free for some schools, those that are richer and receive better elementary and secondary education are more likely to apply and get into the free schools, leaving less for the poor. This relates a lot to one of the conclusions of the paper, which is that resources should be given to primary schools if the country has not reached a universal level of it because investing only in colleges could lead to more inequality instead of the outcomes the country may want. Generally, the paper's thoughts on education and the returns from it were fascinating, and it is cool that primary education has higher private and social returns than secondary or higher education, especially for social returns in poor countries.

Tommy MacCowatt

This study by Psacharopoulos and Patrinos highlights the importance of expanding human capital through education. In under-developed countries, increases in education are crucial to growing the economy and increasing productivity. Countries with the lowest income levels ultimately have higher rate of return, of 9.3%, on their education, compared to a high-income country where the rate of return is 8.2%. This shows that the private benefit of being educated in a lower income country is higher than a country with higher income levels. This was not particularly surprising to me, but I was shocked that the mean years of schooling was just 5 years in these low-income countries. Despite going to school for 4.2 fewer years on average, these countries see a higher rate of return on their investment in education. This should encourage under-developed countries to narrow their focus and increase investments in education.

The social returns of increases in education are also highlighted throughout the paper. These benefits are much harder to measure as they are not monetary, but they are more important to the overall health of the country. In developing countries, the social return on completing primary education is 22.1%, which is higher than the average country which is 17.5%. There is an even larger gap for people who attend secondary school where the social benefit is 18.1% in low-income countries compared to the average of 11.8%. These figures show just how much of an impact education can have on an individual and their community. Despite the difficulties of measuring the social benefits of education, the authors do provide strong evidence of positive social impacts.

Jacob Thompson

When thinking of education as an investment and its returns, I’m curious as to what risks we can associate with investment in education and how we place a value upon it. The authors went very in depth into the rates of return on investment in education, but didn’t really discuss the risks with aiming for higher rates. Is it simply the chance that putting more money into developing education won’t lead to higher returns, or are there other risks involved with these investments in education? I would love to see how far this idea extends and how we approach education investment when taking into account the risks and rewards of it all. Additionally, I’m curious as to how the authors assign a value to education and determine when the returns on education are high enough to warrant the level of investment we have produced. Do we place a monetary value on education, or is there another way to determine an adequate amount of returns in comparison to how much we have invested in education? Overall, I wish the authors had addressed both of these questions a bit more, although I did appreciate being able to see how returns on investment in education have evolved over the years and where they are the most noticeable.

Grace Owens

In this paper, the first statistic that really caught my attention and was mentioned in some of the previous comments was that the private returns to female education exceed that of males by about two percentage points. This is important to note because it directly ties in to what we hav been discussing in class about the need to invest in education, particularly that of women. Especially that it is statistically proven that the returns to investment are higher with females than males, reinforces its importance in places in need of significant economic development. I also found it interesting that there is another view that having the certification of graduating itself provides benefit, even potentially without it changing their intrinsic productivity. On one hand, this is beneficial because it encourages being educated and graduating. However, on the other hand, it could decrease the importance of actually learning and doing well in school, if people attend just to get by and do the minimum in order to graduate.

Mark Natiello

It was interesting to read about the Mincerian method and the full discounting method when it comes to calculating returns to education. I appreciated the explanation of how the full discounting method calculates both the private and social returns of education. I always wondered how something like the social benefit is calculated by economists. The author mentioned that social benefits should include non-monetary benefits of education but there isn’t enough empirical evidence on social benefits from education, so economists must use the observable costs and of education.

I also found it interesting to read about the ability bias in the Mincerian theorem. Griliches analyzed the issue and found the bias is small or negative and adding more variables will not solve the issue. I wonder how “ability” is calculated and if it is something that improves over years of education within countries. How much does the ability bias in a developed country like the US compare to developing communities Africa?

I also appreciated how the authors recognized that there are multiple views regarding earnings premiums associated with the level of education. One is that productivity increases as people acquire additional qualifications but another is that earnings increase with education can be because of credential effects. I feel like that is very real possibility in certain situations. Many people debate that you can get a better quality education at certain schools in the country but in some cases, the institution provides better name recognition or credential value in a high-paying sector. However, they did ultimately say that by and large, while there is some evidence of weak job screening, education is generally associated with earnings because of productivity.

Finally, it was interesting to hear about the “race between education and technology”. This is when the price of education fails to decline proportionately in the face of rapid supply increases. This shows that demand for skill grows faster than the supply of skills.

Ella Hall

One thing that stuck out to me from this reading was their inclusion of the opportunity costs associated with sending children to school as a part of their discussion. We have discussed the opportunity costs in class in terms of the need for the children to be working as insurance for the family and the adults’ future. The paper pointed out that there are also forgone earnings for the individual choosing to embark on their education and extra fees that incur from doing so. Of course, there are long-term earnings that can be gained from attending primary or higher-level education, but those can be harder to see or prioritize when there are more pressing, immediate needs for financial security or income. This concept, I think, is similar to some of the challenges surrounding sustainable products. Most sustainable products have a higher price tag, but over their lifetime can save the consumer significant amounts of money. However, overcoming that initial barrier to entry of the high upfront cost can be difficult, and sometimes people cannot save the money needed to buy in a sustainable alternative, even if they know long-term it will be financially beneficial. They need a good now and can afford the disposable, cheaper, traditional option. I think this is really important to remember when discussing education as well. Just because families know that education will result in long-term financial gains, does not mean they have the ability to send their children to school. I think keeping this in mind, it becomes obvious that you cannot just look at the evidence presented in this paper and push families to send their children to school, but there has to be investments made elsewhere, like in safety nets or subsidies or higher wages, to make the barriers of entry less burdensome.

Brad Stephenson

It is interesting to see the high rates of return of education in developing countries. While it makes sense that, due to the low level of human capital in these countries, there would be higher rates of return, one may also argue that there are not the positions or institutions available in these countries to fully take advantage of increases in education. While this assumption makes intuitive sense, this article clearly shows that this is not the case. I interpret this study to show that developing countries have the capabilities to utilize an educated workforce, meaning that a lack of human capital is slowing the development of developing economies. This insight should guide policymaking efforts and change the way societies in developed countries think about the situation of developed economies. Additionally, the widespread understanding of the need for education in developing countries would change much of the negative beliefs regarding poorer countries. Many people in the United States and other developed countries view poor countries and their populations as corrupt, ignorant, and lazy. While some know that this assumption of these populations is false, sharing information regarding the actual struggles that these developing economies face will generate more understanding and sympathy for their situation. A push for more education and the eradication of the belief that education is not useful in developing countries due to a lack of development and institutions would greatly contribute to the growth of developing economies.


Though this was only mentioned briefly, I found the section comparing the human capital versus the screening hypothesis (workers are selected because of their higher qualifications and not their actual enhancement in productivity from additional schooling) to be somewhat confusing. I don’t understand how a firm would actually be able to tell a worker’s productivity before hiring them and seeing their performance in the workplace firsthand. While more education clearly does lead to increased productivity based on the data, I would assume when hiring firms assume this to be true and therefore will hire workers simply based on the amount of education they have received. While the paper does state that findings showed that workers who barely passed versus those who barely failed high school had similar earnings enough to discredit the screening hypothesis, I was still surprised that a worker who completed high school would receive essentially the same job as a worker who hadn’t. I guess it does make sense that a less productive worker would be more likely to be fired from a job than a more productive worker and that this correlates with the amount of education they have received, but overall, this idea still does not make complete sense to me.

Claire Kallen

The part of this paper that I found to be the most interesting was about the 2000 study. It was shocking to me to read that the price of education is going up even though the supply itself is increasing. This means that education is not “winning the race” which was surprising to me because of what we have been studying. However, something I connected this too was on the topic of higher education and how many successful people never attended college or dropped out. Higher education does not always benefit the individual because they have to give up the time and resources to commit to higher education. But, I was surprised that education as a whole was raising in price because you would think as there is more education the price would drop.
Later the paper discusses how you have to consider that enrollment in education, specifically higher education, has gone up while the returns have not increased. This is why it is so important to consider all the variables because while the price for education may be high it is because the returns have not changed while the enrollment has. To me, it seems that education has become more available which is good and shows a lot of progress. But with that the way returns are measured should probably change to represent the access to education so that we can see the returns increasing.
Overall, this paper was very interesting to see the application of what we have been talking about in class regarding education. I am surprised to see that as education is becoming more common that returns are going down because that is the basis of what we have been working towards is education the population. I think it would be interesting to consider isolating these factors would show us what should be changed in order to better represent the world. After all, that is what we talked about a few weeks ago, models need to be changed and updated.

Sally Ennis

I really enjoyed looking at the results from this regression. Some of the results are what you would expect but some of them are very surprising. For example, Figure 4 shows the relationship between returns to schooling and economic growth in Argentina, and the rate of return was relatively stable while growth was extremely volatile. The article mentions that there is tension between education and technology, but what is the potential missing variable in the graph that could explain how the returns remained so stable, as I would think it would ebb and flow with the growth projections? In the section that is focusing on the social returns for education and income, I think that the findings, largely supporting that the social rate of return on education is very high, are completely in line and support what we have been talking about in class. Not only because education is a positive externality, however the data suggests that taking that into account the return could be 50% higher than normal, but also the idea of assortative matching. Overall, I found the conclusions fascinating and seeing the relationship between education with income and other variables in developing countries.

Matt Condon

The results of this paper seem to be reassuring but not necessarily surprising. The clearest result of these studies is that there are social rates of return on investment that are higher than the private benefits, which has been proven in the literature time and time again. However, the one thing that I could not help but thinking while reading this article is that it seems that we have only scratched the surface in measuring the accurate rates of return on education investment. There are a few areas where it seems that measurement could be improved. For example, throughout much of this paper, the author discusses schooling in different countries as if it is a uniform good, but the quality of schooling can vary greatly and has a massive impact on return on investment. I believe that some measure for the quality of schooling as well as attendance by students needs to be included in order to have a comprehensive understanding of education’s returns. Additionally, the author provides an example of the difficulty of measuring the number of lives saved by improved sanitation conditions that came from a woman who received a higher level of education. This value seems incredibly difficult to track, and if we were able to calculate the number of lives, how would we put a value on that to determine the positive social benefit of schooling? While research needs to continue about the benefits of education, it seems that the literature is in agreement on the existence of private and social benefits of education, and now the focus needs to transition to the mechanisms for determining how to measure the value of returns and proposed subsidies for education.

Jack Denious

The World Bank Group’s paper does a great job asking some important questions about the rate of return on investment into education and more importantly takes some steps to quantify the results - which I believe would be the most difficult part of this discussion. When I think about the returns on education, my first thought is that I know that the public will benefit from higher levels of education but I don’t know how easily it could be quantified as the impact better education has on an individual or a population has some many other factors. We’ve talked about how health, home-life, quality of the educator, and many other factors can have on the return that education has. The article also reinforces another topic we’ve covered - which is that the returns on education for girls and women have a dramatic effect on the health of children within the home as well as women’s agency. The article also places priority on the education of girls as well as primary education compared to secondary education, in certain countries.

Kaylann Adler

One thing that I found interesting in the paper was the stability of the returns to schooling over time in Argentina, in that, even though Argentina has gone through both positive and negative changes in GDP/capital from 1980-2005, 25 years, the returns to school have stayed relatively stable. According to the paper, this might be because as more educated people enter the labor force, the demand for higher skills also increases, instead of the expected outcome, which is that the rate of return would have decreased as an increased proportion of the labor force was educated. This also suggests that people with higher education in the labor market receive higher returns to schooling because their additional education is valuable to employers to try and keep up with technological advancements; however, because the returns to education continue to increase even as the number of people who are getting more education are also increasing, this also shows that the advancements in education are not enough to keep up with the advancements in technology. However, I’m not sure if I’m actually understanding this correctly because earlier in the paper, the authors show that the average rate of return for the mean years of school is slightly decreasing, which the authors say also suggests that education is no longer winning the “race between education and technology.” Could the paper be showing that although the rate of return to the average years of schooling is decreasing, there are increasingly higher returns for people who get more education because of the advancements in technology? I think I’m just confused over this section of the paper, although I do understand the rest of the paper.

Jacob McCabe

The article on the returns to investment in education just hammers home many of the points we made in class. For example, the fact that returns to education in low income countries are high than those of high income countries is something that is both intuitive and essential for development planning. What I found interesting is that even while more of the population gets educated and high skilled labor becomes more in-demand, the returns to education stay stable as a result of the increasing sophistication of the economy. From the base level education is a catalyst for development because it provides the human capital and critical thinking skills necessary to make big-picture decisions. As we read about this, I become more and more thankful for the opportunities we have as a result of being at an institution like Washington and Lee, where we are able to sharpen these skills and become assets to the economy's stock of human capital.

Kevin Thole

This report concisely and clearly explains the returns of education in different domains. It shows that an additional year of schooling will have different returns in different contexts. For example, an additional year of schooling in primary school has a much larger effect on future earnings than an additional year of high school. In countries with gender disparity in education rates, more effort should be put towards educating girls because it has a higher return.
In a perfect world, countries would devote as much resources as possible towards educating as much of their population as they can. However, In countries where the public financing of education is a scarce resource, they must triage education sometimes. This paper increases understanding of where they should divert their funds to get the maximum return on investment. It also shows how these returns differ in different regions of the world due to external factors such as corruption or a poor education system. This allows us to see how these factors hold back a country's human capital and therefore their economic development.

A Facebook User

I found it really interesting how even though enrollment in education has increased 3x that since 1970, the returns have not changed. There should be decreasing returns because as the marginal product of labor for each additional educated worker should decrease. It confuses me that this not the case even though the article points out that the technological progress is "Winning the race." I would think that maybe this would be the case because of people who achieve higher education don't study the areas that would result in the most productiveness or most technologically advanced skills. Also I think women's education has obviously increased a lot since 1970 but there is still a large portion of women who after college start a family and don't go into the workforce.


I am honestly not that surprised by the results/findings from this paper. The rate of return on investment into education is questioned. Higher levels of education tends to have a positive effect in many aspects of peoples lives such as health and income. This article also looks at the benefits of education for women and how that can help them and a countries development. They placed an emphasis on this part of the article which I think is needed given the strides of economic development seen with more educated women.

Another part of the article that stood out, we the figures and tables. The graphs and numbers illustrate all the of the points the author argues. Figures 9 and 10 do a great job of providing numbers and evidence as to why returns are higher in low income countries relative to higher income countries. The mean years of schooling in less developed areas such as Sub Saharan Africa is 5.1 years compared to that of more advanced economies which is 10.2. It is much easier for Sub Saharan Africans to have higher returns because the standards of education are half of the advanced economy.

Connor Verrett

I found the idea of comparing the return on investment to education to the return to investing in stocks and bonds. I have never really thought of education that way, maybe because I am not really the one paying the bills, but I thought it was very enlightening. It also makes sense in the context of everything we have learned in class that priority should be given to females. I feel like every reading we do it becomes more reinforced how important female human capital is for development. I have also never really thought of technology and education being in a race until now.

Isaiah Curtis

I found it interesting that the overall school enrollment is increasing. Additionally, how in less developed regions it follows that the rate of return of education is higher. I think Jake makes an interesting point on this subject. I believe that the increase in enrollment and return rates has something to do with the growth of an economy due to increased education, in addition to institutional development. It's also interesting how the private sector sees to grow at a faster rate than the public sector, leading to growth in equity markets and things of the sort. Education as a whole is necessary if we wish to grow the entire pie, like we discussed in class.

Alexandra Lindsay

This paper solidifies our discussions on the benefits of investing in human capital, specifically in education. The most significant of these observations, in my opinion, is that the private returns to female education exceed that of males. The results say that this "does not imply that earnings are higher for females." I'm curious what return variables that the authors are looking at otherwise, and how they choose these factors. Additionally, with so much evidence pointing to the positive returns of women, it's disappointing that many nations have not made the education of women a priority.
It's also interesting really interesting that this paper points out that earnings increase with education, because it shows that the worker is more likely to be productive, rather than looking at their intrinsic productivity. This is also supported in Figure 7, where we see that returns to those working in the private sector are higher than those working in the public sector. Interestingly, the authors note the advantages for workers in the private sector are connected to the idea that education leads to higher productivity, rather than an increase in skills. Just looking at productivity as a result of education seems like a narrow view. However, productivity may be the most accurate factor to measure.

Valerie Sokolow

This reading emphasized a lot of the topics we’ve already covered throughout the semester. Based on the different measurement methods, I am curious about how previous studies have tried to measure the social benefits of education (or anything). The authors mentioned that ideally, the social benefits should include non-monetary benefits of education, but that limited empirical evidence on the social benefits make this impossible. The authors also mentioned that estimation of returns to education has been popular subject in research and that contributions have grown. I’m sure that more details would have been somewhat irrelevant in the context of this paper, but I’m curious about how/in what ways people have made progress in attempting to estimate the social benefits of education. The paper points out that it’s difficult to estimate things like “the number of lives saved because of improved sanitation conditions followed by a woman because she has received more education.” I believe there are ways to estimate measures like this, and I wonder what approaches other researchers have taken in order to make these estimations. Furthermore, the authors note the creation of databases with estimates of the return to schooling and I wonder how accurate they are in measurement and how they compare with each other.

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