Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 171: Returns to Higher Education - a regional perspective

Mikaela Backman () and Lina Bjerke ()
Additional contact information
Mikaela Backman: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Lina Bjerke: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden

Abstract: The returns to education have been thoroughly investigated and Sweden has shown to have a relatively low return compared to other countries in Europe. Nevertheless, few studies have combined the regional perspective with returns to education. Hence, the purpose of the paper is to analyze regional differences in their returns to higher education within natural science, engineering and medicine. We assume that individuals maximize expected utility; they will try to attain the highest expected return to education as possible. The regional sum of employment possibilities as well as unemployment shares may differ between regions. Therefore, it is plausible to believe that the regional return to education varies between locations which accounted for in the empirical part of the paper. The result shows that there are clear differences between regional classifications concerning returns to higher education. Central urban regions, except the three largest cities and ten largest universities have the highest return to education. These regions may need to compensate the individuals with a higher return. The three largest cities in Sweden have a relatively low return but have other amenities that attract individuals.

Keywords: returns to higher education; regional attractiveness; Sweden; Mincer equation

JEL-codes: H52; I21; I22; J61; R11

30 pages, March 25, 2009

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