Return To Education Literature Review

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The objective of this literature review is to explore what have already been written and get a better understanding on private return to schooling. Moreover through the literature it becomes clearer on how to reply to our research questions and how to meet the objectives on this dissertation.
Theoretical review

Return to education is today’s investment in term of monetary and non-monetary cost (Spraul, 2006) in order to get immediate need satisfaction or future monetary and non-monetary benefits (Dohmen, 2004).The return to education can also be formulated as how investment in education can yield future benefit (Dohmen, 2004) Return to education can be defined as the difference between the price of educated and non-educated labor. Individual
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The cost is divided into four parts, the direct monetary costs, indirect costs and indirect monetary cost, and opportunity cost (OECD,…show more content…
However there is also the society and the government who benefit from it because education creates future human capital (Vila, 2000). There is monetary benefits for the individual after graduation, that is an increase in his relative net income (OEDC,2012) after tax and pension (Dohmenn,2004) which lead to positive change in consumer’s behavior (vila,2000) and a higher participation social life (OEDC,2012).
Non-monetary benefits
There are non-monetary benefits not only for the individual but for the society also. Those are positive external effect as Mincer (1991) argued that the higher is the educational level, the lower will be the risk of unemployment because there will be better labor opportunity. () claimed that if the individual is satisfied with the work, it will lead to motivation at work thus an increase in the social status of the individual,(vila;2000) and by consequent it will lead to efficient decision making at work.
Benefits of private return to education
According to Harry () private return to schooling has many benefits. One of these is that all around the world the private return is 10% per year and it is higher for the sub Saharan country. Moreover he also argued that return to schooling is higher for women and that tertiary education yield more return than the primary school.
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