Examining the Relationship between Educational Investment and Personal Income in Taiwan

• Main Authors: Liao Mao-jung, 廖茂榮
• Other Authors: Weng Shang-jin
• Format: Others
• Language: zh-TW
• Published: 2003
• Online Access: http://ndltd.ncl.edu.tw/handle/19900364479276344278

碩士 === 東吳大學 === 經濟學系 === 91 === There has been many debates about Taiwan should have more colleges or not. According to the theory of human capital, educational investment can accumulate the human capital, raise productivity, and increase personal income. It is believed that the human resource development policy had made Taiwan, which has poor natural resource become a developed country in the past 50 years. Many empirical researches have confirmed this theory. However, does educational investment improve economic development and raise personal income? The educational reform policy since 1987 has made the higher educated workers increase by setting up more colleges and on the job training. On the contrast, the economic growth rate had been going down to negative, and unemployment rate had reached its peak at 2001. Although transforming into a knowledge-based economy is current policy, over educated labor may waste the budget. Three empirical studies would be verified in this research. First, the model of human capital investment and personal income distribution proposed by Mincer (1974) had been tested with the 1992 and 2001 data of Taiwanese educational statistical indicators and human resource survey. Secondly, the indicators of mismatch between occupation and schooling attainment proposed by Clogg and Shockey (1984) were used to evaluate whether the mismatch prevalence increases after the expansion of the education. Finally, the cost-benefit analysis of educational investment (Psacharopoulos, 1981) was applied to calculate the returns on educational investment. Results show that the increasing of schooling and working years raises the personal income. Furthermore, the effectiveness of schooling had increased, and the effectiveness of working which is larger than that of schooling had decreased after the education expansion. In the properly educated labor market, there is a surplus supply in most occupations except market agents and the technical workers. When there is a surplus, the job opportunity of lower educated workers would be crowded out. Besides, overeducated workers still earn more while doing the lower skilled job. The cost-benefit analysis shows that if the expansion of the education could fit the needs of industry, the internal return of educational investment would increase. In Taiwan, this internal return rate is higher than market interest rate. Investment in education is worthwhile. To sum up, the research suggests that we can upgrade the industrial technology, develop the economy, and raise personal income by educational investment. The policy of education expansion should be persisted.