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Higher ED and THE OKLAHOMA ECONOMY
November 13, 2018 Mark C. Snead President and Economist
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An Achille’s Heel is a weakness in spite of overall strength, which can lead to downfall.
Wikipedia
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DATA SUGGEST: The ‘higher education’ problem in OK is probably more severe than generally believed… … and the economic gains from solving it are probably greater than generally believed
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OK Continues to trail u.S. Ed attainment But the target is Shifting
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Key shifts: Gains on non-high school completion are largely exhausted in OK and other states Greatest influence on labor supply is now taking place at higher levels of education Higher ed requires extended years of training Greatest income gains are in higher education
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OK is struggling to boost higher education
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ED Gaps reflect multiple years of activity
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Education gaps are persistent
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Human capital still works as an economic development strategy particularly Higher Education
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Higher Ed ‘Magic’ is traced to:
Broad labor force influence Much greater income gains per person Education is a ‘good’ public good Positive economic growth effects
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Ed is a key piece of the U.S. labor force participation puzzle
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Ed is a key factor in joblessness
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U.S. income premiums remain intact
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OK Income premiums Remain quite large
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OK Income gains strong at all ed levels
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OK Real Income gains are very strong relative to u.s.
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Too many college grads? Data and research say probably not but,
2. College degree ≠ college education
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Is public funding of higher ed a Good deal for taxpayers?
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Current public opinion?
Yes, economic benefits to society result from a more educated workforce Greatest economic benefits are from higher forms of education Most of the costs should be borne by students who receive most of the benefits Public spending on student financial aid is preferred over direct operational expenditures
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OK Higher ed is a More than $5 billion Operating entity
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spending on higher ed is not a net drain One of a handful of Govt expenditures with (+) Multipliers
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Other aspects of State Impact:
Key sources of regional activity across the state Higher ed employs many of the state’s most highly educated workers, particularly in medicine and research Nearly all expenditures take place in-state At least $500 million in out-of-state student spending Net inflow of college students into OK is highly positive
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Modeling economic growth effects from education
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Link from Ed to Earnings - Levels
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Link from ED to Earnings – Change
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Ed is one of several ‘growth factors’
Strong agreement on: Education Labor force participation rates Private capital investment Traded activity outside the region Much less agreement on: Infrastructure R&D activity Others…
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We construct a 50-state model using the top 4 Growth factors
Relative to the 50 states, Oklahoma has: Low educational attainment Low labor force participation rate High private capital investment (oil and gas) High traded activity outside the region OK is weakest on labor force issues
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Model results suggest:
Recent income strength in OK is far greater than suggested by education gains Income in OK is far lower than suggested by the high level of traded activity State income consistent with high use of private capital per worker State income consistent with low participation rate
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(Cont.) Model Results suggest:
Matching the U.S. in educational attainment would: raise the state’s employment-population ratio from 58.1% to 60.6% and add 57,000 more jobs (36th to 24th in participation) increase total personal income in the state by an estimated 15.5%: $7,080 per capita; (28th to 13th) $28 billion annually (28th to 24th)
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Significant Barriers remain
Cultural change – missionary work Education illusion traced to oil/gas State funding share State tax policy
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Higher ed funding remains weak
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state Tax revenue Rebound underway
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Higher ED and THE OKLAHOMA ECONOMY
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