Private and Social Rates of Return to Secondary and Higher Education in New Zealand: Evidence from the 1991 Census

Abstract

With signifcant increases in the demand for higher education in New Zealand since the I98Os, the question of the size of the returns to investments in education has been of signifcant interest. Despite this interest, studies have been few in number and based on aggregated rnertsures from the 1960s to 1981. This study is the first to utilise micro-level data from the I991 New Zealand Census. The study employs and compares the conventional methods of regression earnings functions, and internal rate of return analyses ofprivate and social rates of return. The results indicate that returns to education are economically signifcant, at rates that are higher for females, even when adjust-ing~for hours of work and female labour force participation differences. The returns are subject to diminishing returns, and social rates of return are 1 per cent to 3 per cent lower than private returns-a result that is consistent with those of OECD countries, but among the smaller differences by international standards.

Human Capital Theory and Education Policy in Australia

“…Estimates of social rates of return as high as 15 per cent have been reported (Miller 1982). Maani (1996) provides similar estimates for New Zealand.…”

Valuing Publicly Provided Services

“…Chia (1990) estimates that the investment in a bachelor's degree in Australia yields a private rate of return of 9.6 per cent for males and 12.6 per cent for females. Maani (1996) provides similar estimates for New Zealand. Borland (1996) and Borland and Wilkins (1996) show that expansion of the supply of skilled labour has roughly balanced growth in relative demand for skilled labour.…”

The effect of fees on participation in higher education: A survey of OECD countries

“…The analysis has since then overwhelmingly emphasised the inter-temporal nature of the investment decision involving direct and indirect costs such as tuition fees and foregone earnings in return for future income gains. 10 A host of international studies has shown that returns to education are positive and significant, as the distributions of earnings and incomes in cross section data are positively related to the level of education and training completed, e.g., Miller (1982) and Chia (1990) for Australia, Vaillancourt (1992) for Canada, and Hunt and Hicks (1985) and Maani (1994Maani ( , 1996b for New Zealand.…”

“…(For example,Beggs and Chapman (1988) andMiller (1982) provide evidence for Australia, andMaani (1994Maani ( , 1996b for New Zealand). This is not inconsistent with the finding that incomes are generally higher for males and that, for example, the net present value of returns to education over a working lifetime is higher for males (e.g., Ministerial Consultative Group, 1994), since rates of return calculations are in relation to earnings of individuals of the same sex, without the educational qualifications.Downloaded by [University of Toronto Libraries] at 05:17 03 February 2015…”