Is Post-secondary Education in Canada a Cost-Effective Proposition?
In the last two parts, we discussed the main methods for calculating the cost-effectiveness of education and presented a summary of the main recent Canadian studies. In this part, we clarify the methodological approach adopted in this study. The approach adopted is based on cost-benefit analysis. According to human capital investment theory and basic investment rules, learning becomes worthwhile where the rate of return is greater than the rate of interest. In addition, if investment projects are optional, one should then choose the one with the highest net present value. Chart 1 contains the monetary components considered in the calculation of the private rate of return. Area A represents additional income received by university graduates from the moment they enter the labour market until they retire (a period which has been hypothetically set at between 22 and 64 years). Total costs are given as the total of Areas B and C. Average annual incomes of high school graduates from 18 to 22
