Perceived rates of return to higher education in Cyprus

Abstract

The paper estimates perceived rates of return to higher education in Cyprus and uses them in logistic regression analysis in order to study the effect of economic considerations on the decision of secondary school pupils to pursue higher education. Unlike earlier studies, the data used in the computation of these rates are based wholly on the pupils' subjective estimates. The results are supportive of human capital theory: The mean rate of return to higher education estimated by higher education candidates is considerably higher than that perceived by labour market entrants. Logistic regression analysis shows the perceived rate of return to higher education, as estimated by both the elaborate and the short-cut methods, to have a significant effect on the pupils' educational intentions. [JEL C25, I21] © 1997 Elsevier Science Ltd.