Life-cycle valuation of different university majors. Case study of Chile

Bernardo Lara, Patricio Meller, Gonzalo Valdés

Research output: Contribution to journalArticlepeer-review

7 Scopus citations

Abstract

The aim of this paper is to calculate the rate of return and the net present value for several fields of university studies in Chile. The methodology employed involves the use of earnings over the life cycle for individuals after graduation. Our results indicate that there are large differences in the economic return to different majors. However, we find clear incentives for studying and financing all of them. The implication here is that higher education in Chile, at least for now, is an attractive investment and should be encouraged. In addition, the results obtained suggest that students tend to choose a university major based on the net present value and not on the internal rate of return.

Original languageEnglish
Pages (from-to)380-387
Number of pages8
JournalInterciencia
Volume42
Issue number6
StatePublished - Jun 2017
Externally publishedYes

Keywords

  • Heterogeneous returns
  • Higher education
  • Human capital
  • Life cycle valuation
  • Major choice
  • Returns to education

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