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Do higher levels of education and skills in an area benefit wider society?

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  • John V. Winters

    (Iowa State University, USA, and IZA, Germany)

Abstract

Formal schooling increases earnings and provides other individual benefits. However, societal benefits of education may exceed individual benefits. Research finds that higher average education levels in an area are correlated with higher earnings, even for local residents with minimal education. Science, technology, engineering, and mathematics (STEM) graduates appear to generate especially strong external effects, due to their role in stimulating innovation and economic growth. Several strategies to test for causality find human capital externalities do exist.

Suggested Citation

  • John V. Winters, 2018. "Do higher levels of education and skills in an area benefit wider society?," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-10, December.
    • Handle: RePEc:iza:izawol:journl:2018:n:130
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    References listed on IDEAS

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    1. Winters, John V., 2014. "STEM graduates, human capital externalities, and wages in the U.S," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 190-198.
    2. Giovanni Peri & Kevin Y. Shih & Chad Sparber, 2014. "Foreign STEM Workers and Native Wages and Employment in U.S. Cities," NBER Working Papers 20093, National Bureau of Economic Research, Inc.
    3. Jennifer Hunt & Marjolaine Gauthier-Loiselle, 2010. "How Much Does Immigration Boost Innovation?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 31-56, April.
    4. Moretti, Enrico, 2004. "Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 175-212.
    5. John V. Winters, 2013. "Human capital externalities and employment differences across metropolitan areas of the USA," Journal of Economic Geography, Oxford University Press, vol. 13(5), pages 799-822, September.
    6. Alex Bell & Raj Chetty & Xavier Jaravel & Neviana Petkova & John Van Reenen, 2019. "Who Becomes an Inventor in America? The Importance of Exposure to Innovation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(2), pages 647-713.
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    8. William R. Kerr & William F. Lincoln, 2010. "The Supply Side of Innovation: H-1B Visa Reforms and U.S. Ethnic Invention," Journal of Labor Economics, University of Chicago Press, vol. 28(3), pages 473-508, July.
    9. Winters, John V., 2014. "Foreign and Native-Born STEM Graduates and Innovation Intensity in the United States," IZA Discussion Papers 8575, Institute of Labor Economics (IZA).
    10. George J. Borjas, 2005. "The Labor-Market Impact of High-Skill Immigration," American Economic Review, American Economic Association, vol. 95(2), pages 56-60, May.
    11. Susana Iranzo & Giovanni Peri, 2009. "Schooling Externalities, Technology, and Productivity: Theory and Evidence from U.S. States," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 420-431, May.
    12. Ufuk Akcigit & John Grigsby & Tom Nicholas, 2017. "The Rise of American Ingenuity: Innovation and Inventors of the Golden Age," Working Papers 2017-6, Princeton University. Economics Department..
    13. Peter McHenry, 2014. "The Geographic Distribution Of Human Capital: Measurement Of Contributing Mechanisms," Journal of Regional Science, Wiley Blackwell, vol. 54(2), pages 215-248, March.
    14. Daniel Heuermann, 2011. "Human Capital Externalities in Western Germany," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(2), pages 139-165.
    15. Alberto Dalmazzo & Guido Blasio, 2007. "Social returns to education in Italian local labor markets," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(1), pages 51-69, March.
    16. Sand, Benjamin M., 2013. "A re-examination of the social returns to education: Evidence from U.S. cities," Labour Economics, Elsevier, vol. 24(C), pages 97-106.
    17. Giovanni Peri & Kevin Shih & Chad Sparber, 2016. "STEM Workers, H-1B Visas, and Productivity in US Cities," World Scientific Book Chapters, in: The Economics of International Migration, chapter 9, pages 277-307, World Scientific Publishing Co. Pte. Ltd..
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    Citations

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    Cited by:

    1. Chise Diana & Fort Margherita & Monfardini Chiara, 2021. "On the Intergenerational Transmission of STEM Education among Graduate Students," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(1), pages 115-145, January.
    2. Vivian Welch & Christine Mathew & Luciana M. Marins & Elizabeth T. Ghogomu & Sierra Dowling & Salman Abdisalam & Mohamad T. Madani & Emma Murphy & Kisanet Kebedom & Jennifer Ogborogu & Kelly Gallagher, 2020. "PROTOCOL: Adult skills development and training in high‐income countries: A Campbell evidence and gap map," Campbell Systematic Reviews, John Wiley & Sons, vol. 16(4), December.
    3. Kunwon Ahn & John V. Winters, 2023. "Does education enhance entrepreneurship?," Small Business Economics, Springer, vol. 61(2), pages 717-743, August.
    4. Chise, Diana & Fort, Margherita & Monfardini, Chiara, 2019. "Scientifico! like Dad: On the Intergenerational Transmission of STEM Education in Italy," IZA Discussion Papers 12688, Institute of Labor Economics (IZA).
    5. Diana Chise & Margherita Fort & Chiara Monfardini, 2020. "Scientifico! like Dad: On the Intergenerational Transmission of STEM Education," FBK-IRVAPP Working Papers 2020-01, Research Institute for the Evaluation of Public Policies (IRVAPP), Bruno Kessler Foundation.
    6. Aboal, Diego & Perera, Marcelo & Tacsir, Ezequiel & Vairo, Maren, 2018. "A guide for the evaluation of programs of human capital training for science, technology and innovation," MERIT Working Papers 2018-031, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    human capital; education; schooling; externalities; earnings; employment;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • I2 - Health, Education, and Welfare - - Education

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