Economic Analysis: Theory and Practice
 

Evaluating the return on investments in higher and secondary vocational education under modern conditions in Russia

Vol. 16, Iss. 8, AUGUST 2017

Received: 29 June 2017

Received in revised form: 10 July 2017

Accepted: 24 July 2017

Available online: 29 August 2017

Subject Heading: ANALYSIS OF REFORM OF EDUCATION

JEL Classification: H43, I26, J24, O15

Pages: 1486–1507

https://doi.org/10.24891/ea.16.8.1486

Mel'nikov R.M. Russian Presidential Academy of National Economy and Public Administration, Moscow, Russian Federation rmmel@mail.ru

Importance The article quantifies individual and budget efficiency of investment in higher and secondary vocational education under modern Russian conditions.
Objectives The purpose of the study is to evaluate the long-term impact of field-specific higher and secondary vocational education on students and the State budget.
Methods The study draws on methods of cost-benefit analysis of higher and secondary vocational education and regression analysis of the Russia Longitudinal Monitoring Survey data.
Results The paper offers an original technique to assess individual and budget efficiency of investment in field-specific higher and secondary vocational education based on the synthesis of cost-benefit analysis and a modified Mincer earnings regression model. I developed regression models to estimate financial benefits of obtaining higher and secondary vocational education under modern Russian conditions, and calculated the return on investment in education for students and the State budget.
Conclusions and Relevance Investment in higher and secondary vocational education are profitable for Russian students and for the Russian State budget, through which the programs are financed. Higher education enables Russian young people to significantly increase their human capital and long-term competitiveness in the labor market, as compared to secondary vocational education. As for the Russian State budget, the return on investment in secondary vocational training is bigger. Therefore, the financing of secondary vocational training programs should receive high priority within the structure of government expenditure on education.

Keywords: investment, human capital, higher education, secondary vocational education, cost-benefit analysis

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