Educational attainment of a region’s youth is correlated with the region’s industrial mix, says Cleveland Fed researcher
Contrary to popular belief, manufacturing appears to support high school completion while degree-intensive industries fall short in doing so
Examining data from the National Longitudinal Surveys of Youth, Federal Reserve Bank of Cleveland economist Stephan Whitaker finds that, since the mid-1990s, the children of parents without a college degree are more likely to finish high school and college if they grew up in a labor market with a higher share of its jobs in manufacturing.
The children of parents without a college degree are also more likely to finish college if they grew up near college-degree-intensive industries, such as healthcare, education, and finance. But Whitaker says more of their peers do not graduate from high school. “In degree-intensive regions, cohorts of children born to non-college-graduate parents have higher shares of both college graduates and high school dropouts,” says Whitaker.
The researcher says that living in a region with more manufacturing appears to support students in some way that enables more of them to finish high school rather than dropping out. But living in a region with more degree-intensive industries fails to provide the same advantages if the student’s parents do not have degrees to access the higher-paying positions in those industries.
Whitaker says there are a variety of channels through which the industrial mix could affect educational outcomes, including the sorting of parents by ability, household income, family formation, the local tax base, community norms of school completion, and perceived returns to education.
“For current workers without college degrees, state and local leaders can offer tax credits and other incentives to attract factories,” says the researcher. “Alternately, they can focus their recruiting and incentive spending on degree-intensive employers who will pay high salaries and attract educated workers to the region. The analysis here suggests that either of these approaches could increase the frequency of local children being the first in their family to finish college.”
Federal Reserve Bank of Cleveland
The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.
The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.
Doug Campbell, email@example.com, 513.455.4479