Estimating the Economic Return and Cost to Different Degree Programs: A Case Study of Public Sector in Pakistan

Abstract

Education is a key factor for the growth of human capital. Human capital is directly related to economic growth and development of a country. This paper looks at the economic returns and cost to different fields of study in Pakistan. To assess the return to education, two main degree program - master’s and professional bachelor’s - are taken into account. Benefits to the individual have been calculated using the government pay scale. Household income data and individual expenditure have been used for calculating per capita educational expenditure. This data has been derived from Pakistan Social and Living Standard Measurement Survey (2004-05). The data is analyzed using Net Present Value (NPV) and Internal Rate of Return (IRR). The result reveals that the rate of return calculated for master’s degree is 26.52% which is comparatively more than professional bachelor’s degree as it is calculated as 23.83%. The results presented in this study are important to government, academic, and policy makers.