REGIONAL RATES OF RETURN TO EDUCATION AND TRAINING IN BRITAIN

Using a structural utility-maximizing human capital model of the post-16 education and training-decision, the paper explores rates of return and lifetime earnings that might influence an individual's decision to participate in post-compulsory education and training. The paper presents ex ante regional rates of return to post-16 further and higher education using information from the General Household Survey in Britain. Based on the empirical results, implications for education and training policy are drawn. The model demonstrates that there are important differences between expected rates of return to the same qualification in different regions. These returns are influenced by the regional labour market and are likely to have important influences on the incentives of individuals to pursue education or to train. The paper also demonstrates the generally low level of differentials in earnings profiles and rates of return in Britain to some qualifications, which further undermine incentives to train.