Increasing bachelor degree attainment as an economic development strategy

In chapter 12 of Investing in Kids, I also provide estimates for how an increase in the attainment of bachelor degrees will affect a state’s economic development. Although some bachelor degree holders will leave their home state, others will remain. Enough will remain that an increase in bachelor degrees has large effects on attracting better jobs and raising state per capita earnings.

I estimate that for each state resident that becomes a holder of a bachelor’s degree, the increase in the present value of per capita state earnings is $376,000. This benefit is sufficient to justify costly programs to increase bachelor degree attainment. For example, a program that would increase bachelor degree attainment by 10% would make sense if its costs per participant were up to $37,600.

The U.S. has long been far ahead of most of the world in bachelor degree attainment. But this advantage is narrowing or disappearing. For example, consider statistics from the Organization for Economic Cooperation and Development, an organization of 34 mostly high-income democratic market economies (most Western European countries, Japan, etc.).  Over all 34 OECD countries, the percentage of 25-34 year olds with a bachelor’s degree or higher degree in 2008 was 26.9%. The U.S. had a higher percentage at 32.3%. But the difference is narrowing.  In 2001, the OECD average bachelor degree attainment for this age group was 17.9%, versus the U.S. figure of 29.9%. The U.S advantage has narrowed in just 7 years from 12.0% to 5.4%.

Obviously there are policies dealing with student financial aid, how colleges are organized, and K-12 that can affect bachelor degree attainment. But college attendance and degree attainment may also be affected by early childhood programs.  There is evidence from Perry Preschool, the Chicago Child-Parent Center, and the Abecedarian program that suggests effects on college attendance and graduation.

An important unanswered question is how universal access to preschool would affect college graduation rates for children from middle-class families. The existing long-term studies of preschool consider disadvantaged children. Their baseline college attendance and graduation rates tend to be low. It seems plausible that effects of preschool on college graduation rates of students from middle-class families might be higher, as more of these students will be on the verge of being able to succeed at college with a little better preparation.  Given the importance of higher education to U.S. economic competitiveness, the effect of universal preschool on college graduation deserves further research.

About timbartik

Tim Bartik is a senior economist at the Upjohn Institute for Employment Research, a non-profit and non-partisan research organization in Kalamazoo, Michigan. His research specializes in state and local economic development policies and local labor markets.
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