Volume 2, Number 3 (Summer) 1967
Schultz, Theodore W. 1967. "The Rate of Return in Allocating Investment Resources." Journal of Human Resources 2(3):293-309.
The advance that has been made in determining the economic value of education, since I last considered this problem, is impressive. This symposium affords an opportunity to take stock with a view of re-examining this problem and of seeing where we have arrived. I shall comment, first, on the advantages of thinking in terms of the rate of return, provided allowance is made for the lack of efficiency prices in the capital market serving private investment in education and for omissions of particular forms of capital when planning for economic development. I shall, then, evaluate the new crop of estimates of earnings from education and of the costs of education. Mainly, however, I shall concentrate on the limits of the rate of return as a guide in allocating investment resources to education.
Department of Economics, University of Chicago. I benefited much from dialogues with Yoram Ben-Porath and Zvi Griliches, from Harry G. Johnson's critical and clarifying pen, from incisive comments by Robert M. Solow, Dale W. Jorgenson, Edward F. Denison, Mary Jean Bowman, and Jacob Mincer, and from a correction and suggestions by Samuel Bowles, Martin Carnoy, W. Lee Hansen, and Finis Welch.
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