Perceived earnings functions and ex ante rates of return to post compulsory education in England

This article offers a direct empirical test of one of the main tenets of the human capital model. It shows that by the end of their compulsory education English pupils in general are aware of the relationship between educational qualifications and average earnings. For the first time in Britain direct calculations are made of ex ante perceived rates of return to upper secondary and higher education. The perceived rates correspond closely to the actual rates estimated by earlier studies. The article also provides useful evidence of differences between social classes and ability groups. In particular it shows that the human capital model offers a much less satisfactory explanation of the behaviour of low ability and working class pupils than it does of high ability and middle class pupils.A sample of just under 3,000 16-years-old students in England were tested on their reasoning ability and asked about their family backgrounds, self concepts, educational intentions and anticipated earning capacity at various stages of their working lives.The research project on which the results in this article are based is funded by the Social Science Research Council.