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Why Should State Government Invest in College Education? An Equilibrium Approach for the US in 2000

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  • Shields, Michael P.

    (Central Michigan University)

Abstract

This paper is a preliminary look at the benefits to states in the US of subsidizing college education. The benefits studies are the external benefits of college education on the earnings of both college graduates and those who have not graduated from college. In completing a college education individuals earn more. In addition, if there are positive external benefits others will also earn more because the average level of college graduates in the state has risen. This study confirms the existence of these positive externalities for the US in 2000 in estimates using the Current Population Survey. Furthermore, these external benefits are large enough that if confirmed in more complete studies would suggest that states invest too little in college education.

Suggested Citation

  • Shields, Michael P., 2008. "Why Should State Government Invest in College Education? An Equilibrium Approach for the US in 2000," IZA Discussion Papers 3569, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3569
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    References listed on IDEAS

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    More about this item

    Keywords

    human capital; externalities; higher education;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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