Presentation on theme: "High Education, High Technology, and High Wages An Exploration into the Relationship between University Education and Economic Prosperity and Dynamism:"— Presentation transcript:
High Education, High Technology, and High Wages An Exploration into the Relationship between University Education and Economic Prosperity and Dynamism: A California Wake-Up Call
Susan B. Carter Mathew Sobek Richard Sutch Center for Social and Economic Policy University of California Riverside
California is a High Wage State Opening Observation
United States California Median Real Wage 1998 Dollars
Index of Median Wages in California US = 1
California’s High-Wage Status is Due in Part to California’s Highly Educated Labor Force
California is a High Education State Due in part to its long history of public and private support for education, particularly higher education.
Educational Expenditures per FTE College Student, All Four-Year Institutions Public and Private Less than $14,000 $14,000 - $17,000 More than $17,000
Percent of Full-Time Workers with a College Education United States California
But, California is Losing its Relative Advantage The proportion of college-educated is falling
California with US=1 Index of Highly-Educated Workers College Degrees
The Proportion of High-School Drop-Outs in California has Ceased to Fall And California has fallen behind the rest of the country
Percent of Full-Time Workers without a High School Education United States California
Something More than just the Educational Mix is Influencing the Wage Structure in California
How do we know? Wages are higher in California, even after correcting for educational attainment levels –Wages of college grads are higher –Wages of high school grads are higher –Until recently, wages of drop outs were higher Next Slide, please
Index of Median Wages High School Graduates in California US=1
Taken together these trends imply... Inequality in California is becoming greater –both absolutely and relative to the US Inequality Measure: The ratio of the wages of full-time workers at the 90th percentile to those at the tenth percentile –AKA: The 90/10 Pay Ratio
Wage Inequality 90/10 Pay Ratio United States California
Why is California a High Wage State?
California is Technologically Advanced Silicon Valley –computers and telecommunication Military Contracts –Aircraft and Space Petrochemicals Our Proxy?
Patenting Intensity Patents per 100,000 United States California
United States California Patenting Intensity Patents per 100,000
California’s High Patent Intensity is a reflection of (a Proxy for) its High-Tech, Entrepreneurial Environment … And a High-Tech Environment May lead to Higher Wages for All
Relative Patenting Intensity California with US =
Relative Patenting Intensity South with US = 100
Relative Patenting Intensity US = 100 Great North Heartland
Relative Patenting Intensity US = 100 New Jersey Southern New England New York
Relative Patenting Intensity West with US = 100
Relative Patenting Intensity US = 100 Rust Belt Minnesota Wisconsin
Universities Patents High Tech
Universities Patents High Tech Adam B. Jaffee. “Real Effects of Academic Research.” American Economic Review 79 (December 1989). Authority:
Universities Patents High Tech High Wages Own Education
Universities High Wages Alfred Marshall
Regression Model Data: CPS March 1994, ‘95, and ‘96 Sample: Full-Time Male Workers –Age18-65 –Born in the USA Dependent Variable: Log Weekly Wage Estimator: Weighted Least Squares
Own Education Four Separate Regressions –No High School Diploma: –High School Diploma: –College Degree: –Advanced Degree: –n = 4,642 –n = 36,343 –n = 11,831 –n = 6,087 n = 58,903
Independent Variables Constant and Dummies for 1994 and 1995 Third-Degree Polynomial in Age State-Level Externality Variables –Patents per capita, [Johnson] –Percent of all year olds attending college [CPS] –Educational Structure of State [next slide]
Educational Structure of State Workers All Workers (three out of four) –Percent that are HS Drop Outs –Percent that have HS Diploma –Percent that have College Degree –Percent that have Advanced Degree IDEA: You are more productive, if those around you are highly educated.
Age-Wage Profile, Full-Time Working Men, Born in the USA Drop Outs Advanced Degree College High School Age
All the Marshallian Variables have Powerful Effects We can demonstrate this with a few examples... Start with HS graduates in Arkansas and ask what the impact on wages in that State would be if it had: –high tech environment of Massachusetts –college enrollment of Massachusetts –educational attainment of Massachusetts
Age-Wage Profile High School Graduates, Arkansas vs Massachusetts Full-Time Working Men, Born in the USA Arkansas With Colleges With Patents Massachusetts Age With LF Mix
How Big Depends Upon the Example Start with High School Grads in North Dakota and ask what the impact on wages in that State would be if it had: –high tech environment of New York –college enrollment of New York –educational attainment of New York
Age-Wage Profile High School Graduates, North Dakota vs New York Full-Time Working Men, Born in the USA North Dakota With Colleges With Patents New York Age With LF Mix
Age-Wage Profile High School Graduates, United States vs California Full-Time Working Men, Born in the USA United States California Age
Conclusion California’s Past Investments in Higher Education have fostered a High-Tech Environment and has supported a High Wage work force California is in danger of losing its edge More support of higher education would yield handsome dividends –to those educated –to others in the State
Dilemma Would not educating more Californians simply benefit the rest of the world at California Tax-Payers’ expense? –They could move to other States Test: Relative Retention of In-State College Degree Recipients –Measured by CS Method
C-S Method In-migration measured as the difference between –the number of 29 or 30 year-olds in the State with a college degree in 1990 and –the expected number of surviving 19 or 20 year- olds attending college in the State in Survival rates calculated for the cohort from the US totals [Census Survival Method]. –See Carter and Sutch  for details.
California is home to more college-educated people than it has educated During the decade , California was a net importer of college-educated people born in 1961 or 1962.
States by Net Importation of College Graduates, Net importers No net change Net exporters
But, California is a net importer of people of all educational levels When we control for California’s population growth over the decade, its status changes...
States by Net Importation of College Graduates, Controlling for Population Growth, Net importer No net change Net exporter
In-migration is not improving California’s Educational mix Can California hold on to its High- Tech, High-Education, High-Wage Position?
A stronger commitment to Higher Education would help