Spatial Disparity of Rate of Return on Education in Indonesia and Local Spillover Impact in Metropolitan Areas

This study measures the rate of return on education investment for each district and city in Indonesia and analyzes its spatial spillover effect on neighboring areas. Using the Mincer model, results show that the rate of return varies widely across regions (1%–11%), with a national average of 5.5%. Spatial Autoregressive (SAR) analysis reveals that an increase in the rate of return on education in one area negatively affects the welfare level of surrounding areas, particularly in metropolitan regions such as Jakarta, Makassar, Banjarmasin, and Medan, due to migration effects.