The system-wide impacts of the external benefits to higher education on the Scottish economy: An exploratory “micro-to-macro" approach

Kristinn Hermannsson (), Katerina Lisenkova, Patrizio Lecca, Peter McGregor and John Swales ()

No 1204, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: The private market benefits of education, i.e. the wage premia of graduates, are widely studied at the micro level, although the magnitude of their macroeconomic impact is disputed. However, there are additional benefits of education, which are less well understood but could potentially drive significant macroeconomic impacts. Following the taxonomy of McMahon (2009) we identify four different types of benefits of education. These are: private market benefits (wage premia); private non market benefits (own health, happiness, etc.); external market benefits (productivity spillovers; and external non-market benefits (crime rates, civic society, democratisation, etc.). Drawing on available microeconometric evidence we use a micro-to-macro simulation approach (Hermannsson et al, 2010) to estimate the macroeconomic impacts of external benefits of higher education. We explore four cases: technology spillovers from HEIs; productivity spillovers from more skilled workers in the labour market; reduction in property crime; and the potential overall impact of external and private non-market benefits. Our results suggest that the external economic benefits of higher education could potentially be very large. However, given the dearth of microeconomic evidence this result should be seen as tentative. Our aim is to illustrate the links from education to the wider economy in principle and encourage further research in the field.

Keywords: Supply side impact; higher education institutions; computable general equilibrium model; Social and external benefits; Crime (search for similar items in EconPapers)
JEL-codes: D58 E17 I23 R13 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2012-06
New Economics Papers: this item is included in nep-cmp, nep-eur and nep-lab
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Citations: View citations in EconPapers (3)

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