Governments are major investors in education, especially at non-tertiary levels of education. From a budgetary point of view, it is important to analyse whether these investments will be recovered, particularly in an era of substantial fiscal constraints. Higher levels of educational attainment tend to translate into higher earnings, which in turn generate higher income taxes and social contributions for governments. On average across OECD countries, the public net financial returns from upper secondary education are about USD 44 600 for a man and USD 13 700 for a woman.
Public returns from education
A well-educated workforce fuels economic growth by meeting the demands of knowledge-based economies, boosting national wealth. Education investments benefit governments through higher tax revenues and reduced welfare spending. Assessing public returns helps gauge the effectiveness of education investments.
Key messages
Higher levels of educational attainment lead to higher returns for the public sector. On average across the OECD, the public net financial returns for attaining tertiary education is about USD 127 000 for a man and USD 60 600 for a woman. As with upper secondary education, direct costs (including student grants) represent the largest share of the total public cost of tertiary education, even though student loans are not taken into account in this indicator.
The share of the population with qualifications at each tertiary level differs across countries. In all countries, the private and public net financial returns from obtaining a bachelor’s, master’s or doctoral degree or equivalent are greater than from obtaining a short-cycle tertiary degree. Although the total costs of a bachelor’s, master’s or doctoral degree or equivalent tend to be higher, the total benefits accrued during individuals’ working lives compensate for the higher initial costs.
Context
Financial returns to tertiary education
Higher levels of educational attainment lead to higher returns for the public sector. On average across the OECD, the public net financial returns for attaining tertiary education is about USD 127 000 for a man and USD 60 600 for a woman. The net financial returns on investment for governments are generally closely related to the private net returns: those countries where individuals benefit the most from pursuing tertiary education are also those where governments gain the largest returns. For tertiary education, this is the case for men in Ireland and the United States, countries with very large net private and public returns for tertiary education.
Public net financial returns for a man or a woman attaining tertiary education (2018)
