The Social Rates of Return to R&D, Scientists, Engineers and Tertiary Education System Investments: International Evidence

The objective of this paper ¡s to estimate the social rates of returns to tertiary education investment and its output -R& D and scientists and engineers- in the economy. In measuring this social impact, we account for the endogeneity problems using instrumental variables. Our instruments are the ones suggested by Hall and Jones (1999). Our econometric results show that the investments variables are indeed endogenous and that our instruments indeed represent the social capital of the economies. The estimated social rates of return to the investments in R& D, scientist and engineers and tertiary education for 70 countries are well above the private one, which may justify targeted policies.