Abstract

Estimating the returns to education is an important aspect of empirical economics. Usually this is achieved by estimating the additional earnings provided by an extra year of schooling. However, given the difficulty of obtaining reliable earnings data, this approach is not always easy to implement. This paper proposes an alternative measure of returns to education based on the probability of “labour market success” associated with different levels of qualification. Returns to education, so conceived, are estimated on data from the 2001 UK Census for the different regions of the UK. Two measures of “success” are used: first, the likelihood of persons in employment being in “good” jobs; second, the likelihood of persons in the labour force being in employment. The results show that, in every region of the UK, better qualifications are significantly and strongly associated with higher probabilities of labour market success.