Sarah Turner, Professor of Economics and Education, University of Virginia

Convergence and Divergence: The Link between Spatial Labor Market Disparities and Educational Attainment

The benefits and burdens of structural changes in U.S. economic activity have not been felt evenly across U.S. labor markets in the last four decades. Workers without college degrees have experienced the largest adverse effects in terms of declines in employment and wages. Declines in job opportunities associated with losses in manufacturing employment and the persistently high relative premium to college-level employment would be expected to increase incentives for educational attainment. But, the realization of educational gains assumes that neither credit constraints nor limits in the supply-side of schooling opportunities impede attainment. Because public schools at the K-12 level rely on both local property taxes and state revenues while colleges and universities receive substantial subsidies from state governments, a basic concern is that declines in regional economic prosperity may place downward pressure on educational resources at the same time that more and more students are seeking to change their prospects through increased educational attainment. Using data on responses in enrollment and degree attainment to local labor market shocks, this analysis shows that while secondary school persistence and college enrollment do rise with declines in local labor market opportunities, there is little evidence of a positive impact on college degree attainment. Concurrent declines in public resources supporting expenditures on schooling at the K-12 level and state appropriations to public colleges and universities provide evidence that the supply side of education markets does not fully accommodate increased student demand.