Social Return on Education in 35 Cities/Districts of Central Java Province

Abstract

Education is closely related to the quality of labor. With good level of education, labor productivity will certainly increase. In addition to reducing poverty, productivity will boost economic growth. However, in Central Java Province the correlation between education and economic growth shows otherwise. Even though economic growth has increased quite well but society'5s average years of schooling is only six to seven years or up to elementary school. By using Mincer wage equation, this paper calculates social return on education within macroeconomic growth regression methods. This paper aims to examine the relationship between education attainment and economic growth. By estimating model derived from Mincer wage equation, we found that there is positive and significant relationships between Gross Fixed Capital Formation and Years of Schooling on Gross Regional Domestic Product. So, improvement in education has significant effect on economic growth.