University education is a good investment

Researchers have compared life-long net earnings and found out that a university education is 14% more profitable than vocational training.

Info Centre KoronaUlla Hämäläinen, Researcher at the Labour Institute for Economic Research, and Roope Uusitalo, Research Coordinator of the same institute present in their article in the latest issue of Talous & Yhteiskunta magazine (4/2003) that the return on a university education compared to that on vocational training is 14%. The measurement is based on the comparison between costs and returns made by way of return calculation for investment. The researchers calculate the return based on life-long net earnings.

In their article, the researchers have calculated the return on education according to the earnings level in 2000. The estimate includes the effect of student aid, unemployment benefit, the gap in wages and salaries and taxation. The differences between this and the return estimates usually presented are due to taking the student aid and unemployment risk into account.

The return on education has often been estimated by comparing the gaps in wages and salaries between different degree holders soon after graduation. A more realistic view of the return can be achieved by taking into account the differences in the risks of becoming unemployed and the real cost of education.

The return on education can be likened to returns on investments in general. 14% return means that university education is still an investment worth making.

Text: Tapio Nurminen
Photo: Ida Pimenoff

Translation: Valtasana Oy

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