Technical secondary education in Egypt with special reference to rates of return of investment

Abdel-Haleem, Sayed Mohamed (1988) Technical secondary education in Egypt with special reference to rates of return of investment. University of Southampton, Doctoral Thesis.

Abstract

The study attempts to investigate how far is it profitable for Egyptian individuals and Egyptian society to invest in technical secondary education. The main purposes of the study are, to measure the profitability of different kinds of technical secondary education in Egypt, both for individuals and for society, using the rate of return to investment as a measurement of profitability, and to compare with each other the rates of return to different kinds of technical secondary education. For these purposes the cost-benefit analysis technique is adopted which involves measurement of benefits, measurement of costs and finally calculating rates of return. For the measurement of benefits, concentration is directed to the direct monetary benefits represented in additional earnings as a result of education as the most important identifiable return to education. Earnings data are derived from a cross-sectional sample of 2116 graduates of technical and basic education in Egypt working in the governmental sector and 745 graduates of technical and basic education employed by the public sector. Lifetime age earnings profiles are constructed for the different groups and categories and earnings differentials are estimated both for individuals and society. Costs of technical secondary education in Egypt are classified into private and social costs and the unit of cost is decided to be that of the student per year. For the purpose of estimating the direct private costs a questionnaire was administered to a sample of 1925 students of the different kinds of technical secondary education, in three different regions in Egypt. An interview schedule was also used to collect data about the same items of costs of the questionnaire, of a sample of 229 students from the sample of the questionnaire with the purpose of checking the reliability of the cost data collected by the questionnaire. Data collected were statistically analysed using a computer run for a two-sample analysis in which the statistics were computed, based on a null hypothesis and added to earnings foregone before taxation to get an estimation of the private costs of technical secondary education in Egypt. Estimation of the social costs of technical secondary education in Egypt is based on data of public expenditure by the state supplied by the Ministry of Education in Egypt. Estimates of both private and social costs are used in estimating the internal rates of return by the use of the internal rate of return (IROR) measure. The internal rates of return are then calculated (at the margin) for both individuals (private rates of return) and for society (social rates of return) as crude rates, for the three different kinds of technical secondary education in Egypt. Rates of return are then adjusted for: Alpha Coefficient, unemployment, wastage, future economic growth and additional payments. Representative private rates of return, (at the margin) are: 7.51%, 7.43% and 7.61% for industrial, commercial and agricultural education, respectively, for working in the governmental sector; and 16.85%, 16.71% and 17.02% for industrial, commercial and agricultural education, respectively, for working in the public sector. Social rates of return (at the margin) are: 4.55%, 4.76% and 4.66% for industrial, commercial and agricultural education, respectively, for working in the governmental sector; and 11.82%, 12.15% and 11.98% for industrial, commercial, and agricultural education, respectively, for working in the public sector. The discussion of these rates in comparison with the prevailing interest rates showed that technical secondary education in Egypt represents profitable chances of investment for individuals if they join work in the public sector but represents unprofitable investment if individuals join the governmental sector for work, while it represents a very weak profitable chances of investment for the society if the graduates are employed by the public sector, and represents a totally unprofitable investment for the society if graduates are employed by the governmental sector. Discussion also showed that there are no significant differences between rates of return to different kinds of technical secondary education in Egypt. (D82733)

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