Impact of credit constraints on social returns to education

Abstract

Are there social returns to education and can they be quantified? Previous studies in this area have mixed results. Acemoglu and Angrist (1999) find little indication of social returns to education in the US. Rauch (1993) on the other hand finds that individual wages in the US increase by 2.8 percent for a one-year increase in average education. From a public policy perspective, the question is of interest because the results would shed light on whether governments should spend on the provision of education. Should the intervention be proportional to the social returns, and can these be accurately measured?