Why is investing in education important?

Economics Wednesday

A: The returns from investing in education are better most financial investments that is why...

According to " Estimating Returns to Schooling from State-Level Data: A Macro-Mincerian Approach" by Steven J. Yamarik, California State University at Long Beach, the social return to investing in education can be as high as 16%.

Abstract (from The B.E. Journal of Macroeconomics.)

In this paper, we use information from U.S. states to determine the social return to schooling. We estimate a macro-Mincerian model where aggregate earnings (or income) depend upon physical capital, labor, average years of schooling and average labor force experience. We find that the social return to U.S. schooling is 9 to 16 percent, which matches estimates of the private return found in the labor literature. Our results therefore provide evidence that U.S. schooling is indeed productive, but generates no positive externalities.