INTERNAL RATE OF RETURN ON EDUCATION in the NEW ECONOMY IN US AND UK, 1995-2000

Erman ERKAN (Başarı Elektronik A.Ş)

Starting by 1990's tremendous development in ICT (Information and Communication Technology) sector occurred especially in United States. Productivity increased followed by wage rates change the labour market equilibrium against conventional sectors. The concept called "New Economy" penetrated to United States by an increasing rate after 1995. First outcomes of the New Economy was increasing productivity and wage rates at ICT sector. Since New Economy, is based on knowledge and its is prerequisite is human capital formation of the labour force, return on human capital investment is standing on its highest rates.

This study analyses the internal rate of return on education of ICT and other conventional manufacturing industry sectors both in US and UK and compare the results both between countries and sectors among 1995-2000. The study continues with analysing job specific wage differentials of ICT sector at US. The role of the human capital in the New Economy is tested.