The External Effect of Education
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Publication date: 2009-06-30
GNPJE 2009;232(5-6):39-60
The author sets out to measure the external rate of return on secondary and university-level education in Poland. The rate is defined as the excess rate of return for human capital. However, the author says it is difficult to precisely quantify the rate due to methodological problems and the unavailability of data. The economic model used in the article is based on the comparative advantage theory. The econometric model identifies the external rate of return on education thanks to the use of instrumental variables. The analysis confirms that there was a shift in the structure of demand for higher education in Poland in 1998-2005. The author uses empirical data to show the positive external effect linked with education. The private annual rate of return on education in Poland exceeded 7 percent in 1998-2005 and was among the highest in Europe. Additionally, the author shows that there is an external effect linked with education. It stands at 1%-5% annually, Strawiński says. The results obtained in the analysis were confirmed using various model options and estimation methods. Moreover, Strawiński showed that as the proportion of the population with a secondary education increased, people began to earn higher paychecks. This means that secondary education generates a spillover effect, Strawiński concludes.
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