Extract

Regional economic growth is influenced by knowledge and knowledge spillovers that are constrained in space (Andersson and Karlsson, 2007). The knowledge embodied in individuals is increased by education and the level of education decided by the individual is mainly set by the monetary gains from the investment. Becker (1964) was one of the first to acknowledge that education is an investment in an individual’s human capital and that it can generate large differences in earnings, but also that the earnings of less educated individuals tend to be sensitive to economic fluctuations. There are different levels in the return to education: individual, social and regional levels. This chapter investigates the returns to higher education in natural science, engineering and medicine in Sweden, using a regional approach. This approach enables the comparison of the return to different regional classifications whereby it adds new knowledge to the existing literature. The empirical analysis is based on individual data for the year 2000, enabling the extraction of individual information on location, educational level, work experience and income. In order to incorporate from all sources of income, we use income instead of wage. As a result, we are dealing with pecuniary income, consisting of or measured in money.