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Education

More Gains to Moving for College Educated Workers

Internal migration of working-age people in the United States has fallen by more than a third – from 18.9 percent in 1994 to 11.4 percent in 2018 (see Figure 1). This phenomenon has received significant scholarly attention – Cooke (2013) for example, attributes this decline to the rise of information and communication technologies. Alternatively, Molloy, Smith, and Wozniak (2011) point to broad macroeconomic shifts.

Reduced internal migration has important economic implications, particularly for labor markets. We find that wages grow faster for movers, especially for those with a college degree.

Why Are Recent Immigrants Better-Educated Than Ever Before?

In a previous blog post, I described two significant changes in the characteristics of newly arriving immigrants (legal and unauthorized) to the U.S. between 1997 and 2017. First, the share of recent immigrants aged 25 and older who had bachelor’s or advanced degrees rose from 30 percent to 48 percent. Second, the origins of new immigrants to the U.S. shifted dramatically, as immigration from Mexico and Europe declined in importance while immigration from Asia and Africa grew. In this post, I examine the relationship between these two changes.

Recent Immigrants Are Better-Educated Than Ever Before

From 1997 to 2007, a newly arrived adult immigrant to the United States was about as likely to have a college degree as to have not finished high school. During that period, each group accounted for about one third of new arrivals (including both legal and unauthorized immigrants). Over the decade since 2007, those odds changed dramatically. The share of recent immigrants with a college degree grew by nearly 50 percent, while the share without a high school degree fell by a similar proportion (see Figure 1). By 2017, a recently arrived immigrant was almost three times as likely to have a college degree as to have not finished high school.

For Teen Workers, Parents’ Education Matters

Teenage employment has declined significantly since the late 1990s. Using data from the Current Population Survey, Figure 1 shows that 63 percent of teens aged 16 to 18 worked in 1993, but that percentage fell to 41 by 2015.

Education and Income Growth

In the New York Times article “Why Is It So Hard for Democracy to Deal with Inequality?” Thomas B. Edsall relates the growth of income inequality in democracies to changes in voting patterns among those who are highly educated.

PWBM’s brief, “Education and Income Growth” was used to highlight that the incomes of highly educated people are growing in comparison to those with less education. The author finds that this trend motivates highly educated voters to support the continuation of current policy rather than policy reforms favorable to the working class.

Tax Benefits for College Attendance

Tax Benefits for College Attendance
  • Tax benefits for higher education make up 17 percent of federal aid for postsecondary students.

  • Families find it difficult to take advantage of tax benefits for higher education. About 14 percent of families do not take benefits for which they qualify. Evidence that tax benefits for higher education induce more students to go to school is weak.

  • The authors explore the potential impact of different simplification strategies, providing a roadmap for future empirical work.

Education and Income Growth

Education and Income Growth
  • The large premium that college degree holders earn relative to workers with only a high school diploma suggests that a better-educated workforce would increase U.S. output.
  • Barriers to borrowing against future income, though, may make it difficult to acquire a college education, implying a potential role for using policy to increase access to college, especially if it is appropriately targeted.
  • However, college education is costly, and the payoff is uncertain and realized only after a lengthy absence from the workforce. Optimal policy, therefore, aims to balance these costs against the potential benefits, requiring the explicit modeling of education attainment when making budget projections.