Investment in education: Measuring private and public returns

Investment in education is one of the most important factors of the social and economic development of modern countries. This work examines the concept of human capital and analyses the returns on investment in education. Investment in education is a capital investment that ensures higher productivity in the economy. To measure the return on the educational investment, the cost-benefit analysis is usually used. It implies the enumeration and evaluation of all the relevant costs and benefits. Estimates show that return on the investment in education is higher then return on the investment in physical capital. Investment in education has both private and public returns; it benefits both individuals and society. Increasing the years of schooling, training, and experience of workers has a significant effect on the earnings of the individuals. Individuals with more human capital tend to be very efficient at their employment search, and less suffer from unemployment. People with high level of education have high labour productivity that, finally, increases the profit of the firm and its market value. Investment in education is very important for the society as a whole - it contributes the economic growth of a country.