Based on a further development of the ZEW microsimulation model of the German tax and transfer system, this study examines fiscal and individual net returns as well as rates of return from investments in education of young adults for the year 2016, and compares them with earlier estimates for the year 2012. According to the results, the fiscal returns to education were, on average, 20.6% per trainee. The number is based on the income individuals earn over the course of their working life until they reach the age of 66, and is considered in contrast to individuals without vocational training and for an investment period between the ages of 17 and 21. Considered up to an age of 66, fiscal returns to education for individuals with a high school and university degree, acquired between the ages of 17 and 25, are, on average, 10.2%. While the individual returns to education from gross income are, on average, higher than 10%, they drop to around 6%, following tax deductions and social security contributions, and due to the withdrawal of transfers. This reduction highlights the interdependency between education, tax and social policy. Compared to 2012, fiscal returns to vocational training increased slightly, while returns to university studies decreased somewhat.
Pfeiffer, Friedhelm and Holger Stichnoth (2018), Fiskalische und individuelle Nettoerträge und Renditen von Bildungsinvestitionen im jungen Erwachsenenalter, ZEW Discussion Paper No. 18-043, Mannheim. Download