The Economic Returns to Higher Education in the BRIC Countries and Their Implications for Higher Education Expansion

Abstract

This paper focuses on the changing economic value of secondary and higher education in four potential world economic powerhouses - Brazil, Russia, India, and China - known as the BRIC countries. We show that in the past twenty-five years in the BRIC countries, changes in rates of return to higher education have not conformed to the diminishing returns to capital theory, which says that rates decline with level of education and that this pattern holds as countries develop economically and educationally. The rates to university completion have generally risen relative to the rates to investment in lower levels of education, and in all but India are now higher than the payoff to secondary schooling. We argue that this reflects the rapid economic change in all four countries, including their incorporation into the global economy, and, in Russia and China, the transformation from command to increasingly market economies.

Keywords: economic returns to higher education, returns to engineering education, BRIC countries, Mincer equation, age-earnings profiles

JEL Classification: J24, J31