The economic impact of education on rural communities

When we discuss education in the context of economic growth, we mostly think of education as a preparation for the job market: learning skills and knowledge to benefit our productivity in the workplace. The last few decades have made economists increasingly aware that “human capital,” the stock of knowledge and creative skills, is not only crucial to individual prosperity, but has much broader benefits for society. These benefits are more indirect, and can range from better health and lower crime to the ability for a region to recover from economic downturns. Education, in short, helps families and towns achieve greater and lasting prosperity.

Most studies on the broader economic gains from education focus on metro regions. For a recent report funded by Idaho’s J.A. and Kathryn Albertson Foundation, we explore the role of human capital and its social returns in rural economies, and how formal education contributes to the well-being of communities.

First, we found that, with the increase in school and graduate education of the labor force over the last 45 years, the gap between rural and metro decreased for adults with a high school diploma, but increased for adults with a bachelor’s degree or higher. Nationwide, 28 percent of adults age 25 and over earned a bachelor’s degree; in rural counties this percentage is well below this average. The geographic distribution of high school dropouts across the nation is also far from even: individuals without a high school diploma are particularly prevalent in rural counties in the southern states, Nevada, and Alaska.

Second, we found that counties’ high school and college attainment rates are indeed important factors in explaining a county’s per capita income growth and economic development. When rural counties increase the level of education of their workforce, they see greater increases in per capita personal income. However, the opposite relationship is even stronger: counties that see a decrease in high school graduation rates experience relatively large declines in per capita personal income. Our results also indicate that higher levels of education do reduce poverty levels, and more so at higher levels of rurality.

Third, education increases the potential productivity of a population. It promotes creativity and provides the required skills to bring ideas to life, be it through industry-academic partnerships or alumni relationships. All of this is essential to entrepreneurship and business development, but it does not come automatically: education needs leverage and an outlet. There are many factors that influence whether or not a region actually translates that potential into reality.

Communities need to build its stock of educated individuals, either by increasing the educational attainment of its own population, or by supplementing its population with more educated workers from outside the region. In order to attract highly skilled workers and retain the best and brightest workers, rural communities need to be attractive, livable communities. This doesn’t mean doing away with the rural way of life. It simply means broadening access to the amenities and infrastructure that attract and retain leaders, entrepreneurs, and the next generation of rural residents.

Besides investing in education, rural communities must explore partnerships with local industries. Industries as diverse as agriculture, tourism, manufacturing, and technology can help jumpstart economic growth with the presence of robust educational training programs or institutions. Education connects schools, community, and industry to create positive feedback loops where need, opportunity, and local know-how reinforce each other and spark tremendous economic growth.

We need to see advanced education for what it can be:  a regional pillar for economic development that promotes ecosystems of innovation through place-based curricula.

Paul Lewin is a professor at the University of Idaho. Economic consultant Willem Braak co-authored this piece.