Education Spending and Workforce Quality as Determinants of Economic Growth

Several studies suggest that there is a statistically significant, positive relationship between education expenditures and economic growth in the U.S. states and among developed countries. Conversely, some literature suggests that there is no link between education spending and economic growth. The...

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Bibliographic Details
Published in:Journal of rural and community development 2015-01, Vol.10 (4), p.24
Main Authors: Clarke, Wes, Jones, Adam T, Lacy, Brett
Format: Article
Language:English
Subjects:
Developed countries
Economic growth
Educational attainment
Expenditures
Industrialized nations
Jurisdiction
Secondary education
Secondary schools
States
Taxation
Teaching
Workforce
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Summary:Several studies suggest that there is a statistically significant, positive relationship between education expenditures and economic growth in the U.S. states and among developed countries. Conversely, some literature suggests that there is no link between education spending and economic growth. There are several explanations given for the lack of a link between spending and growth including higher levels of taxation dampening growth, spending on administration instead of teaching, and poor student-teacher ratios. Our analysis of county level expenditures and demographics finds that it is not the expenditures that matter but the educational attainment level of the workforce. While a locally provided high school degree is still important, it is no longer an end but a means toward attaining a college degree, potentially obtained outside the jurisdiction. These results imply that local development officials must do more than spend on primary and secondary education; they must attract and/or retain college educated individuals as well.
ISSN:1712-8277