At a time when questions are being raised about the value and cost of higher education, a new study released today (Oct. 1) suggests that education beyond high school creates an economic impact in West Virginia alone of $4 for every $1 spent.
The study commissioned by the West Virginia Higher Education Policy Commission shows that the economic impact of the 2010 graduating class of the state’s public colleges and university will generate nearly $6 billion in economic impact for the state over a 20-year period – or more than four times the estimated $1.4 billion that was spent from all sources, including $404 million from state appropriations.
“We already know that higher education is good for the individual because it increases the graduate’s earnings potential and can generate many other personal benefits,” said John Deskins, co-author of the study and director of the Bureau of Business & Economic Research, a unit within West Virginia University’s College of Business and Economics.
“With this research, we have a much better understanding of how higher education benefits the state overall,” Deskins said.
The study considered all degree types and found that each category generates earnings that are far above those of high school graduates.
After 20 years of experience, the study estimates that those with doctoral degrees will earn an estimated six times as much as those with high school diplomas, while those with associate’s degree will earn roughly twice as much as those with a high school diploma.
“It is clear that education is vital for our overall economy, and given that the long-run economic impact of higher education for the state is greater than four times its cost, it seems as though we are receiving a good return on our investment,” said Eric Bowen, BBER research associate and study co-author.
The research is based on all 2010 graduates of West Virginia’s public colleges and universities, including community and technical colleges, who worked in the state in 2012 — a total of slightly more than 6,300 men and women.
Based on work and income patterns from 2012 and prior years, the study begins by projecting the additional income that these graduates will earn in the state over the coming two decades above what they would have likely earned absent the attainment of higher education. The study then uses a sophisticated economic modeling system to estimate the additional economic activity that will likely occur in West Virginia as their income premiums are spent in the economy and likely productivity increases generated by their higher levels of education attainment.
Overall, the report estimates that the total economic benefits to the West Virginia economy associated with increased productivity and spending resulting from the 2010 public college and university graduating class is nearly $6 billion over the 20-year period of analysis, 2013-2032. By comparison, the authors estimate that $1.4 billion was spent to educate these men and women beyond high school, of which approximately $404 million was derived from direct state appropriations to colleges and universities, $92 million from state-supported scholarship programs, with the remainder originating from tuition, gifts and other sources.
Statistics from the report also indicate that around half of college graduates remain in the state to work after graduation.
“Effective policies to keep a larger share of our college graduates in the state after graduation would have the potential to considerably increase the economic impact,” Deskins said.
The full report is available from the WVU Bureau of Business and Economic Research for free download in PDF format at be.wvu.edu/bber. For further information about the WVU College of Business and Economics, please visit be.wvu.edu.
CONTACT: John Deskins; WVU College of Business and Economics
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