Demand for higher education and the role of starting earnings expectations : the case of final-year secondary education students in Jordan
This thesis examines the determinants of student demand for higher education (HE) in Jordan with special attention devoted to the role of expected rates of return (ERRs) to HE. In the context of economic theory, mainly Human Capital Theory (HCT), earnings expectations lie at the heart of students' post-secondary education decisions. Therefore, the study is primarily based on final-year secondary school students' HE decisions and starting earnings expectations. The starting earnings expectations are critically analysed and used to construct short-cut ERRs to HE. Also, comparisons between expected starting earnings and actual public sector starting wage rates are carried out. The findings lend support to the economic explanations of demand and, in particular, the HCT predictions. Through applying logistic models, the study finds that ERRs influence students' post-secondary education decisions to enrol in HE positively. Students from low-income and large families are found to be less likely to consider continuing into HE. Consistent with the empirical literature, student academic ability is also reported to impact positively the likelihood to consider enrolment. Other variables such as parents' level of education and student's area of residence are proved not to be significantly associated with demand. Consumption value of education is greatly perceived, however, among both groups of the participants (i.e. those intending to undertake HE and those not). This indicates a weak prediction role of consumption motives in student demand for HE. Overall, the analysis also indicates a strong role of education in determining students' starting earnings expectations. Furthermore, the calculated ERRs show females to expect higher return from HE than males, a pattern matching with the most recent Jordanian study of rates of return (RORs) to education (Talafeh, 2003). However, students appear to be overoptimistic regarding starting earnings for both secondary education and HE. In this regard, the analysis suggests that students do not base their starting earnings expectations on the current actual wage rates, a finding to consider in future RORs and ERRs and their link with demand for HE studies in the context of Jordan. devoting more resources towards poor students, particularly those characterised with high-academic ability. Making students better-informed about HE and labour market return and conditions may also enhance the efficiency of individual decisions on HE and contribute to alleviating the mismatch between HE and the labour market in the country.