Returns to Higher Education in Chile and Colombia

This study uses the information published by the Ministry of Education in both Chile and Colombia to estimate the economic returns to higher education, disaggregated by degree and institution. They replicate the economic exercise that households may carry out, with the information available, when making the decision to invest in higher education and choosing a specific degree and institution.

The results suggest that investing in higher education is not always profitable. Some degrees yield quite high rates of return, as is the case in the fields of law in Colombia and risk prevention in Chile. There is, however, a significant variation in the net returns across degrees and across institutions for a given degree. For example, a university career in design in Chile and a technical degree in systems in Colombia can yield positive or negative returns depending on the HEI, and these returns will have an enormous dispersion. As a result, a significant number of graduates from the higher education system run the risk of obtaining negative net economic returns.

The problem is more severe in the case of technical degrees: in Chile, 51% of the students in technical programs would have been better off financially without higher education, while in Colombia this share increases to 59%. Since technical programs tend to attract low-income students, this result is particularly worrisome; the system could be failing precisely those students for whom making a mistake is more costly.