A Structural Equation Model of Tertiary Academic Achievement and Individual Private Returns

Abstract

The primary objective of this study was to estimate individual private returns to tertiary academic achievement based on the classical human capital model. Using non-random sampling method, a structured questionnaire was used to collect data from relevant participants. A reduced form Structural Equation Model (SEM) in STATA 12 was applied to estimate individual private returns to tertiary academic achievement. The computed results show that both tertiary academic achievement and college ranking have sizable effects on individual incomes; while tertiary academic achievement further has a significant impact on employment prospects.  Congruently, employment prospects and individual incomes exhibit substantial endogenous positive impacts on tertiary academic achievement. The reduced form estimates of the SEM show that grade point average (GPA) and college ranking have significant positive impacts on tertiary academic achievement, employment prospects and individual incomes.  

Keywords: tertiary, academic, achievement, private returns, Structural Equation Model