Investment in human capital and its efficiency

Straipsnyje analizuojama privati ir visuomeninė investicijų į žmogiškąjį kapitalą nauda ir kaštai, aptariami juos lemiantys veiksniai. Remiantis pateiktu investicijų į žmogiškąjį kapitalą kaštų ir naudos modeliu apskaičiuoti tokie pagrindiniai investicijų efektyvumo rodikliai: 1) privati universitetinių ir neuniversitetinių aukštojo mokslo studijų išsilavinimo pajamų norma, 2) visuomeninė pajamų norma. Autorių apskaičiuoti išsilavinimo pajamų normų rodikliai palyginami su analogiškais kitų išsivysčiusių šalių (ЕВРО) rodikliais.In this article, investment in human capital arc analysed. Costs and benefits of investment in human capital are presented. The costs consist of direct costs and indirect costs, in the form of foregone earnings of not entering the labor market after secondary school, minus the resources made available to students in the form of grants and loans. The benefits are the gains in post-tax earnings minus the repayment, if any, of public support during the period of study. Using cost-benefit model the authors estimated private rates of return to university and nonunivcrsity higher education. The estimation results show that private internal rates of return to university education in Lithuania arc higher than the real interest rate of return on other productive assets and equal 12,87 percent, suggesting that human capital investment is an attractive way for an average person to build up wealth. The internal private rate of return to university education in Lithuania is 5,63 percentage points lower than in United States, but it is 6,35 percentage points higher than in Italy. Although private rate of return to nonunivcrsity higher education is 2,69 percentage points lower than to university education, it is also high, and demonstrates that there arc strong incentives for an average student to engage in education activity. The authors prove that earnings differentials and the length of education arc the prime determinants of the private internal rates of return. The benefits of higher education to society arc assessed on the basis of social rates of return, which reflect the costs and benefits of investment in education to society. Estimation results show that in Lithuania social rate of return is lower than private rate of return by 1 percentage point, however it is high, suggesting that investment in education is a productive use of public funds