20/10/2002 - Higher education provides measurable returns for individuals that are well in excess of the potential rate of return on investing the money represented by the cost of undertaking a university course, according to new analysis from the OECD.
Taking into account both higher average earnings and lower risks of unemployment, university graduates stand to earn substantially more over their working lifetime than people who end their education at secondary level, says the latest edition of the OECD's annual Education at a Glance.
On the basis of an "estimated private internal rate of return" that takes account of these and other factors -- including the time taken to earn a degree, tuition costs and taxes which have a negative impact on returns -- an investment in higher education is clearly an attractive way for an individual to improve his or her prospects of building up wealth.
In all countries, the OECD publication reports that this private rate of return is higher than real interest rates, and often significantly so. At the low end of the scale, for 10 countries for which comparable data are available, it stands for men at around 7% in Italy and Japan, rising to between 10% and 15% in Denmark, France, the Netherlands, Sweden and the U.S. and to 17% in the U.K.
School expectancy, or the average number of years that a person is likely to spend in formal education, rose between 1995 and 2000 in all but two of the 20 OECD countries for which comparable data are available. The increase was biggest in Greece and Hungary, at 16% and 14% respectively.
The increases largely reflected longer periods spent in secondary education beyond minimum
school-leaving age, according to the OECD. Several factors underlie that trend, including higher risks of unemployment and other forms of exclusion for young people with insufficient education.
But numbers of students enrolled in tertiary education also rose in almost all OECD countries between 1995 and 2000. In many OECD countries, the transition from education to employment has become longer and more complex, enabling - or obliging - students to combine learning and work.
At university and non-university tertiary levels, Poland and Hungary showed the biggest rises in student numbers, reflecting increases in both population and enrolment rates. In France and Germany, numbers of students fell, reflecting a fall in the total student-age population, even though enrolment levels as a proportion of the population rose. In Turkey, by contrast, enrolment numbers fell despite an increase in population.
In parallel, amidst a general trend towards freely circulating capital, goods and people, individuals are also looking more closely at foreign institutions for tertiary education. In 2000, according to available data, 1.6 million foreign students were enrolled in tertiary-level institutions outside their country of origin. Of these, 1.5 million were studying in OECD countries, an increase of 14% compared with two years previously, with numbers of students from other OECD countries rising at around the same rate as numbers of students from outside the OECD.
China accounted for the largest share of foreign students studying in OECD countries, with 7.1% of the total. Among OECD countries, students from Japan and Korea comprised the largest groups, at 4.6% and 3.9% respectively, followed by Greece (3.6%), Germany (3.5%), France (3.4%) and Italy (2.7%). India was the second largest non-OECD provider of foreign students after China, with 3.4% of the total, followed by Morocco (2.7%) and Malaysia (2.4%).
A handful of host countries has capitalised on this interest in cross-border educational services, with the U.S. hosting 28% of these foreign students, followed by the U.K. with 14%. Germany, France and Australia were also high on the list of destinations for foreign students.
Among other trends, the indicators in Education at a Glance 2002 also show that:
The report is available to journalists through the OECD's password-protected website or from the Media Relations Division. For further information, journalists may contact Andreas Schleicher (tel  1 45 24 93 66) or Eric Charbonnier (tel  1 45 24 88 62) in the OECD's Education Directorate.
For more information on Education at a Glance.
"Education at a Glance 2002"
382 pages, OECD, Paris 2002
ISBN 92-64-19890-3 (96 02 03 1)