College education offers a hefty 8.8% pay premium for each marginal increase in the number of years of intellectual attainment.

Fiona Sydney

2018-04-29 13:44:00 Sun ET

College education offers a hefty 8.8% pay premium for each marginal increase in the number of years of intellectual attainment in contrast to the 5.6%-6% long-run average U.S. equity premium.

World Bank economists George Psacharopoulos and Harry Patrinos investigate 1,120 studies across 139 countries to derive an average annual rate of return on each marginal increase in the basic level of educational attainment. This 8.8% pay premium far exceeds the U.S. stock market return about 5.6%-6% per annum over the past 5 decades. The pay premium excludes social gains such as positive social interactions and low mortality rates in close association with better education. Also, the pay premium is higher for girls and college graduates (in direct comparison to postgraduates). This premium is higher in low-income countries primarily as these countries recruit a smaller share of international citizens with higher education.

In accordance with the law of lower marginal value, this pay premium dwindles for each extra year of educational attainment. Psacharopoulos and Patrinos posit a current race between education and technology. This race suggests that high-tech advances accelerate to favor high-skill workers to the detriment of low-skill workers. The normative implication for public policy is that the government should subsidize college education or even graduate school attendance. This subsidization serves as a worthy socioeconomic investment in human capital.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Mark Granovetter follows the key principles of modern economic sociology to analyze social relations and economic phenomena.

Charlene Vos

2023-02-21 08:27:00 Tuesday ET

Mark Granovetter follows the key principles of modern economic sociology to analyze social relations and economic phenomena.

Mark Granovetter follows the key principles of modern economic sociology to analyze social relations and economic phenomena. Mark Granovetter (2017) &

+See More

Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fundamental analysis of AMD (U.S. stock symbol: $AMD).

John Fourier

2025-10-08 11:34:00 Wednesday ET

Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fundamental analysis of AMD (U.S. stock symbol: $AMD).

Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fund

+See More

What are our proprietary alpha stock signals?

Andy Yeh Alpha

2020-09-11 10:22:00 Friday ET

What are our proprietary alpha stock signals?

AYA fintech network platform provides proprietary alpha stock signals and personal finance tools. In recent times, we have completed our fresh website up

+See More

Netflix raises its prices by 13% to 18% for U.S. subscribers.

Chanel Holden

2019-01-25 13:34:00 Friday ET

Netflix raises its prices by 13% to 18% for U.S. subscribers.

Netflix raises its prices by 13% to 18% for U.S. subscribers. The immediate stock market price soars 6.5% as a result of this upward price adjustment. The b

+See More

The Trump $1.5 trillion hefty tax cuts and $1 trillion infrastructure expenditures may speed up the Federal Reserve interest rate hike.

Joseph Corr

2018-03-15 07:41:00 Thursday ET

The Trump $1.5 trillion hefty tax cuts and $1 trillion infrastructure expenditures may speed up the Federal Reserve interest rate hike.

The Trump administration's $1.5 trillion hefty tax cuts and $1 trillion infrastructure expenditures may speed up the Federal Reserve interest rate hike

+See More

A small fraction of the population enjoys most capital and wealth creation.

Jacob Miramar

2017-03-15 08:46:00 Wednesday ET

A small fraction of the population enjoys most capital and wealth creation.

The heuristic rule of *accumulative advantage* suggests that a small fraction of the population enjoys a large proportion of both capital and wealth creatio

+See More