Testing Alternatives to Finance Higher Education:uman Capital Contracts in Colombia
Date Issued
2008
Date
2008
Author(s)
Lozano, Felipe
Abstract
Advances in the fields of finance offer new alternatives which can lead to an improvement in the access to education in developing countries. Human Capital Contracts (HCC) are introduced as a partial solution to the access to higher education. This article evaluates the viability of implementing HCC in Colombia, replicating an exercise for its valuation as presented by Palacios (2004) with estimations for future income from the Labor Observatory for Education of the Colombian Ministry of Education and its Following Graduates Survey (FGS 2007). The database allows the analysis of the particular group of higher education graduates, providing information about fields of study and parental education attainment and also allows accounting for some characteristics of the Higher Education Institutions. The analysis is made through a Mincerian and Splines model to derive income forecasting equations for the graduated population and then, valuate Human Capital Contracts. he results show that returns to higher education in Colombia are high enough to give an economic incentive for the implementation of HCC to finance totally university programs for students who want to access to public Higher Education Institutions. In the case of private institutions, given the available information, HCC are an alternative to finance partially their programs. For total financing of programs at private universities, HCC still requires governmental aid to make the contract both, profitable for investors and attractive for students.
Subjects
Higher Education Returns
Education Financing
Human Capital Contracts
Mincerian Equation
Splines Models
Robust Standard Errors
Interval Regression
Type
thesis
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