Estimating the private rate of return to education for Indigenous Australians

The purpose of this discussion paper is to estimate the private rate of return to post-compulsory education for Indigenous compared with other Australians. The results presented here show that there are considerable financial benefits to completing a post-secondary qualification for Indigenous people but the return to additional post-compulsory schooling is less attractive. Compared to others born in Australia, the private rates of return for Indigenous Australians were estimated to be lower for post-compulsory schooling and higher for post-secondary qualifications. These lower private rates of return to post-compulsory schooling could in part explain the low retention rates of Indigenous youth to year 12. The high estimated rates of return to post-secondary qualifications may well reflect the particular abilities and levels of motivation of the small group of Indigenous Australians who now have these qualfications. Both education and employment and training policies have an important role to play in enabling Indigenous Australians to increase their opportunities in the labour force