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Returns to higher education: Comparison of the USA and Europe
Název práce v češtině: Návratnost vyššího vzdělávání: Srovnání USA a Evropy
Název v anglickém jazyce: Returns to higher education: Comparison of the USA and Europe
Klíčová slova: Returns to education, higher education, mincer equation, USA, Europe, educational system
Klíčová slova anglicky: Returns to education, higher education, mincer equation, USA, Europe, educational system
Akademický rok vypsání: 2017/2018
Typ práce: bakalářská práce
Jazyk práce: angličtina
Ústav: Institut ekonomických studií (23-IES)
Vedoucí / školitel: Mgr. Barbara Pertold-Gebicka, M.A., Ph.D.
Řešitel: skrytý - zadáno vedoucím/školitelem
Datum přihlášení: 11.06.2018
Datum zadání: 11.06.2018
Datum a čas obhajoby: 07.09.2021 09:00
Místo konání obhajoby: Opletalova - Opletalova 26, O206, Opletalova - místn. č. 206
Datum odevzdání elektronické podoby:28.07.2021
Datum proběhlé obhajoby: 07.09.2021
Oponenti: Mgr. Tereza Palanská
 
 
 
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Seznam odborné literatury
Attanasio, O. & Kaufmann, K., 2008. Subjective Returns to Schooling and Risk Perceptions of Future Earnings-Elicitation and Validation of Subjective Distributions of Future Earnings. Mimeo
Becker, G.S., 1983. Human capital: A theoretical and empirical analysis with special reference to education, Chicago: IL: University of Chicago Press
Card, D. & Krueger, A.B., 1992. Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States. The Journal of Political Economy
Wooldridge, J. (2012): Introductory econometrics: A modern approach. Cengage Learning
Heckman, J. J., L. J. Lochner, & P. E. Todd (2003): “Fifty years of Mincer earnings regressions.” NBER Working Paper (9732).
Hanushek, E. A. (1986): “The economics of schooling: Production and efficiency in public schools.” Journal of Economic Literature
WEBBER, Douglas A. Are college costs worth it? How ability, major, and debt affect the returns to schooling. Economics of Education Review [online]. 2016, 53, 296-310
BHULLER, Manudeep, Magne MOGSTAD a Kjell G. SALVANES. Life-Cycle Earnings, Education Premiums, and Internal Rates of Return. Journal of Labor Economics [online]. 2017, 35(4), 993-1030
DEL REY, Elena a María RACIONERO. Financing schemes for higher education. European Journal of Political Economy [online]. 2010, 26(1), 104-113
MARTIN NORDIN a DAN-OLOF ROOTH. Increasing Returns to Schooling by Ability? A Comparison between the USA and Sweden. Manchester School [online]. 2014, 82, 1
Předběžná náplň práce
Research question and motivation
The main research question of this thesis is whether the financial returns of higher education to students are higher in the tax-subsidy system or in pure-loan system of higher education financing, represented by Europe and the USA respectively.

Answer to this question could help students and their parents in deciding over where should they study, if they should invest into the higher education and how much taking into account all the risks and benefits. Decisions concerning education are amongst the most important we make in our lives and they determine a large fraction of the life of everyone in modern world so naturally the educational system is a big concern of governments and its policies. Financial returns are one of the main reasons for studying and their magnitude is an important incentive for people to pursue high education. Therefore it is important to find out which of these approaches is better for increasing this important factor.

Contribution
The subject of returns to schooling and investment into education is analysed a lot. Returns in the USA are widely discussed in Webber (2016) for Europe the article by Bhuller, Mogstad and Salvanes (2017) even takes into consideration the life-cycle earnings. Their results show that higher education is in both areas still considered a positively returning investment, but we can’t compare them (or other works) because there are always used different methods, data samples and adding different controlling variables. This is why this thesis aims to compare the differences in results based on the fact whether students have to pay for higher education or not. Theoretical comparison of different financing methods of education with emphasis on optimal participation depending on the level of insurance of each method is described by del Rey and Racionero (2010). Some empirical evidence of different relationship between ability and returns to education in countries of our interest can be found in Nordin and Rooth (2014). This article is very close in achieving the result of my research question proving that for lower ability levels the return of schooling is greater in the USA and for higher ability it levels up. However I want to take into consideration more countries in Europe as well as to control for more variables in the regression and not only the ability.

Methodology
I am going to analyse the effect of achieved education on income using OLS regression based on Mincer equation and add some controlling variables such as gender or age which are also affecting wages in order to reduce disturbances based on covariance between explanatory variables. For European countries I will use data from Statistics on Income and Living Condition (SILC) and for the data from the USA I will use American Community Survey (ACS) and National Survey of College Graduates (NSCG). In the end I will compare the resulting coefficient of education for both educational systems.
Outline
Introduction
The importance of education
Methodology theory
USA
- Schooling system
- Data
- Returns
- Costs
Europe
- Schooling system
- Data
- Returns
- Costs
Comparison
Conclusion
Předběžná náplň práce v anglickém jazyce
Research question and motivation
The main research question of this thesis is whether the financial returns of higher education to students are higher in the tax-subsidy system or in pure-loan system of higher education financing, represented by Europe and the USA respectively.

Answer to this question could help students and their parents in deciding over where should they study, if they should invest into the higher education and how much taking into account all the risks and benefits. Decisions concerning education are amongst the most important we make in our lives and they determine a large fraction of the life of everyone in modern world so naturally the educational system is a big concern of governments and its policies. Financial returns are one of the main reasons for studying and their magnitude is an important incentive for people to pursue high education. Therefore it is important to find out which of these approaches is better for increasing this important factor.

Contribution
The subject of returns to schooling and investment into education is analysed a lot. Returns in the USA are widely discussed in Webber (2016) for Europe the article by Bhuller, Mogstad and Salvanes (2017) even takes into consideration the life-cycle earnings. Their results show that higher education is in both areas still considered a positively returning investment, but we can’t compare them (or other works) because there are always used different methods, data samples and adding different controlling variables. This is why this thesis aims to compare the differences in results based on the fact whether students have to pay for higher education or not. Theoretical comparison of different financing methods of education with emphasis on optimal participation depending on the level of insurance of each method is described by del Rey and Racionero (2010). Some empirical evidence of different relationship between ability and returns to education in countries of our interest can be found in Nordin and Rooth (2014). This article is very close in achieving the result of my research question proving that for lower ability levels the return of schooling is greater in the USA and for higher ability it levels up. However I want to take into consideration more countries in Europe as well as to control for more variables in the regression and not only the ability.

Methodology
I am going to analyse the effect of achieved education on income using OLS regression based on Mincer equation and add some controlling variables such as gender or age which are also affecting wages in order to reduce disturbances based on covariance between explanatory variables. For European countries I will use data from Statistics on Income and Living Condition (SILC) and for the data from the USA I will use American Community Survey (ACS) and National Survey of College Graduates (NSCG). In the end I will compare the resulting coefficient of education for both educational systems.
Outline
Introduction
The importance of education
Methodology theory
USA
- Schooling system
- Data
- Returns
- Costs
Europe
- Schooling system
- Data
- Returns
- Costs
Comparison
Conclusion
 
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