A good reason to invest in yourself
What region wouldn’t want to be the next Silicon Valley or Research Triangle? According to the think-tank Milken Institute, this is not an impossible goal with the right policies and investments in higher education.
While it’s intuitive that an educated population, good jobs, and prosperity go hand-in-hand, a recent study by Milken Institute – ‘Matter of degrees’ – proves the strong relationship between educational attainment and a region’s economic performance.
Linking educational attainment to real wages
The researchers looked at a unique data set over time of educational attainment by occupation and industrial employment by occupation, which was linked together to examine these relationships, as measured by metropolitan statistical area (MSA) real wages and real gross domestic product (GDP) per capita. Some of the key findings of the report:
- Education increases regional prosperity: Adding one extra year to the average years of schooling among the employed in a metropolitan area is associated with an increase in real GDP per capita of 10.5 per cent and an increase in real wages per worker of 8.4 per cent. Danville, VA, for example showed a rise in average years of schooling by 1.1 years to 13.18 from 1990 to 2010. This boosted real GDP per capita by 12.2 per cent or $3,440.
- Better educated, bigger benefits: The benefits of additional schooling to regional economies are even greater for better-educated workers. Adding one year of schooling to the average educational attainment among employed workers with at least a high school diploma is associated with an increase in real GDP per capita of 17.4 per cent and an increase in real wages per worker of 17.8 per cent. In contrast, an additional year of education for workers with just nine or 10 years of schooling has little effect on real GDP per capita and real wages per worker.
- Certain industries lead to higher returns: The returns to investment in education appear to be higher in some industries than in others. Given the same number of average years of schooling among the workforce, the returns to one more year of education are the greatest in metros with a large employment share of business and IT services industries, which involve high-skilled jobs.
- Clusters count: In metros with clusters of high-skilled occupations, the share of workers holding at least a master’s degree is much higher than in metros without significant clusters, perhaps because of the intense competition for employment. In metros with clusters, the study also found that skilled occupations are highly concentrated in a handful of industries. Combined, these findings demonstrate that a region’s mix of industries contributes to differences in educational attainment within occupations.
The full report can be downloaded here.
