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Methodological approaches to assessing the effectiveness of private investment in education

Vol. 11, Iss. 4, DECEMBER 2018

Received: 7 May 2018

Received in revised form: 20 June 2018

Accepted: 27 June 2018

Available online: 29 November 2018


JEL Classification: G11, J24

Pages: 387–400

Bukreev I.A. V.I. Vernadsky Crimean Federal University, Yalta, Russian Federation

Subject The article investigates the methodological approaches to assessing the effectiveness of private investment in human capital as a source of self-expanding value.
Objectives The article aims to form a methodology of assessing the economic efficiency of education investment as a component of investing in human capital. The method rests upon the difference in income when comparing the average wage values at different levels of education and the costs of training.
Methods The research uses the comparative method. It compares the average wage values at different levels of education and the training costs.
Results The article considers the necessary equal income of extra revenue (annuity) during the labor activity calculated with the education funds and earnings lost during the study. The values of real indicators help determine the net income from investments in education at different levels.
Conclusions and Relevance The developed method allows to determine the effectiveness of the use of labor and financial resources as an investment in education. The methodology can help assess the effectiveness of private investment and the necessary rate of return on investment in education.

Keywords: investment, education, human capital, labor capacity, potential extra revenue


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