Educational Attainment And The Rural Economy

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CENTER forRURAL DEVELOPMENTEC-776-WEducational Attainment and the Rural Indiana EconomyIntroductionKevin Camp and Brigitte WaldorfEducational attainment plays an important role in individuals’ economicsuccess: increased levels of schooling are typically associated with higherchances of having a job and earning a higher salary (Borjas, 2009). By implication,the well-being of a community hinges on whether or not its population is highlyeducated, and communities with poorly educated residents are disadvantaged interms of their income and investment opportunities (Camp and Ayres, 2013).Department of Agricultural EconomicsThis article compares educational attainment levels for rural and urban areasin Indiana. First, we explore general trends in U.S. educational attainment. Wecontinue by comparing these trends with educational attainment levels in ruraland urban Indiana, focusing on the prevalence of educational deprivation in ruralparts of the state (see box, page 3). Finally, we discuss the implications of thiseducational deprivation, with an emphasis on its relationship with employmentand income.Trends in Educational AttainmentEducational attainment levels in the United States have increased substantiallyover the last century. As shown in Figure 1, between 1964 and 2012 theAmerican population changed from being overwhelmingly poorly educatedinto a population that is well or even highly educated. In 1964, more thanFigure 1. Percent of the U.S. Population Aged 25 and Over byEducational Attainment, 1964 to 2012Purdue UniversityThe Rural Indiana Issues SeriesAudience: Local and state leaders who workwith rural communities.Purpose: To find data about issues ofconcern in rural communities and to interpretthese data in meaningful ways to aid indecision-making.Method: U.S. Census data analyzed acrossthe county groupings—rural, rural/mixed,urban.Potential Topics: Demographic changes,business development, health, healthcare, local government, taxes, education,agriculture, natural resources, leadershipdevelopment, etc.Outcome: Better, more informed decisionsby rural decision-makers.Source: 1964 to 2002 March Current Population Survey, 2003 to 2012 Annual Social and EconomicSupplement to the Current Population Survey (noninstitutionalized population, excluding members of theArmed Forces living in barracks).

Educational Attainment and the Rural Indiana Economy EC-776-WTable 1. Indiana’s Educational Deprivation, 1970 and 2010*% adults with a 4-yearcollege degree or more% adults without a highschool 713.44.3197010.747.7201028.214.6YearIndianaUS* The 1970 figures are taken from the U.S. Census Bureau 1970 Census of Population. The 2010 figures refer to the 2007 to 2011 average ofthe American Community Surveys.Table 2. Educational Deprivation in Rural, Rural-Mixed, and Urban Indiana, 1970 and 2010*% adults with a 4-yearcollege degree or more% adults without ahigh school rRuralRural-MixedUrbanEducationalDeprivation* The 1970 figures are taken from the U.S. Census Bureau 1970 Census of Population. The 2010 figures refer to the 2007 to 2011 average ofthe American Community Surveys.half of Americans over the age of 25 did not have a high schooldiploma. By 2012, only a small minority of about 12 percent didnot complete high school. This change has been accompanied byincreases in higher levels of educational attainment, including aremarkable jump in the share of residents who have completed afour-year college degree. In 1964, only 9.1 percent had completeda college education. Today, college-educated residents account foralmost a third of the population.Where Does Indiana Stand?Rising levels of educational attainment are also observed inIndiana, with college degree attainment levels jumping up fromonly 8 percent in 1970 to their current level of almost 23 percent(U.S. Census Bureau).However, this increase is far from enough to catch up with thenational level. Indiana’s share of highly educated adults is not onlysmaller than the national share, but the gap has been increasingover the last 40 years (Waldorf, 2006). The resulting educationaldeprivation is only tempered by a slightly smaller share of Hoosierswithout a high school degree compared to the national share.As Table 1 shows, Indiana’s educational deprivation more thandoubled between 1970 and 2010.Deeper analysis reveals that educational deprivation affectsrural and urban Indiana differently. Table 2 shows the educationaldeprivation scores for rural, rural-mixed, and urban counties inIndiana. (For details on the classification of Indiana’s 92 countiesinto rural, rural-mixed, and urban categories, see Ayres, Waldorf,and McKendree, 2012.)Rural Indiana has the worst educational deprivation. Only 13.4%of rural residents had a college degree in 2010 (Table 2). The shareof rural residents without a high school degree had decreasedsubstantially since 1970, but it was still higher than the national2share. Thus, rural Indiana is doubly disadvantaged by not keepingpace with the national trend of reducing the share of very poorlyeducated people and by failing to increase the share of highlyeducated people to the national average. Moreover, the differenceswith the national averages are huge and have increased since 1970.As a result, the educational deprivation score in rural Indiana ishigh and rising. Educational deprivation in rural-mixed counties isless severe, but still worse than the Indiana average. And, just as inrural Indiana, educational deprivation in rural-mixed Indiana hasincreased over time.The situation looks quite different in urban Indiana. Bothin 1970 and 2010, urban Indiana had a slightly lower share ofcollege-educated adults than the nation as a whole, but faredmore favorably than the nation with respect to the percentageof residents without a high school degree. As a result, there isno educational deprivation in urban Indiana (with educationaldeprivation scores slightly below zero), and the discrepancybetween educational deprivation in rural Indiana and educationaldeprivation in urban Indiana has been increasing over time.Inside Rural IndianaData in Table 2 indicate that rural Indiana has a very high levelof educational deprivation, substantially higher than rural-mixedand urban Indiana. But these data do not tell the whole story,because educational deprivation varies a lot across rural counties.Table 3 (page 3) presents a ranking by educational deprivation ofIndiana’s 42 rural counties. LaGrange County has by far the highestlevel of deprivation, at 42.7. This is likely due to the county’s largenumber of Amish inhabitants. All but one rural county experienceseducational deprivation above the state average of 4.3. Theexception is Brown County, at 2.2, which has a disproportionatelyhigh share of well-educated retirees.PURDUE EXTENSION1-888-EXT-INFOWWW.EXTENSION.PURDUE.EDU

Educational Attainment and the Rural Indiana Economy EC-776-WEducational DeprivationWe define a region as educationally deprived (Waldorf, 2008) if it has: A smaller percentage of college-degree holders, and A larger percentage of residents without a high school degree than the U.S. as a whole.In this article we measure the severity of educational deprivation by comparing the regional percentages with thenational percentages.For example, we assigned Indiana an educational deprivation score of 4.3 in 2010 (Table 1). This is obtained in threesteps:a. Calculate the difference between the U.S. and Indiana percentages of college degree holders: 28.2% 22.7% 5.5% pointsb. Calculate the difference between Indiana’s percentage and U.S. percentage of residents without highschool degrees: 13.4% -14.6% -1.2% points.c. Add the differences: 5.5 (-1.2) 4.3The higher the score, the more severe the educational deprivation.ruralFor example, in the graph below, the 2010 educational deprivation scoresare higher than those of 1970, indicating that educational deprivation hasworsened in Indiana compared to 40 years ago.rural-mixedA negative score indicates that the region is not educationally deprivedbut has a better educational status than the U.S. as a whole.For example, urban Indiana had negative scores both in 1970 and 2010and is thus not educationally deprived.2010urban-51970051015Educational Deprivation in IndianaTable 3. Ranking of Rural IN Counties by Educational Deprivation (2010)RankRural CountyEducationalDeprivationRankRural 741Posey4.421Fulton14.442Brown2.2Source: Authors’ calculations based on data of the U.S. Census Bureau, 2007-2011 American Community Survey.3

Educational Attainment and the Rural Indiana Economy EC-776-WWhat Are the Implications?ConclusionHighly educated workers have higher-paying jobs (Ryanand Siebens, 2012) and are less likely to be unemployed thanworkers with little education (Borjas, 2009). Not surprisingly, then,educationally deprived regions are often associated with pooreconomic performance, especially with respect to wages andunemployment (Marre, 2011).From an educational attainment perspective, Indiana’s rural andrural/mixed counties are severely lagging behind urban counties.Compared to urban residents, a larger percentage of rural residentsdo not have a high school diploma, and a greater fraction of ruralresidents do not have a college degree. In fact, in urban Indiana,the share of people with at least a four-year degree is roughlytwice as high as in rural Indiana. Finally, data reveal that economicconditions are worst in counties with the most severe educationaldeprivation.To explore this relationship in rural Indiana, we rank the 42 ruralcounties on the basis of educational deprivation, unemploymentrate, and median earnings. Table 4 presents the five bestperforming rural counties in Indiana. As anticipated, the overallbest performers are among the least educationally deprived. Interms of educational deprivation, all five best-performers are in thetop half of rural counties, and Posey, Gibson, and Tipton countiesare even in the top 10. Additionally, unemployment rates of alltop performers are below average, and their median earnings areabove average. Interestingly, three of the top-five performers—Posey, Gibson, and Spencer—are located in the southwesterncorner of Indiana in the economic region around Evansville.The five worst-performing rural Indiana counties are listedin Table 5. These counties have above average unemployment,and below average median earnings, and their educationaldeprivation scores are among the lowest in the state. While theworst performing county—Starke County—is in the northwesternportion of the state, the remaining four are located in SouthernIndiana.Rural Indiana communities stand to gain by reversing thesetrends. Bolstering educational attainment levels can resultin improvements to rural economies through a number ofmechanisms. For one, rural counties with better-educatedresidents tend to have more high-knowledge occupations. Theseoccupations are becoming increasingly important determinants ofeconomic growth (Henderson and Abraham 2004). This suggeststhat educational attainment increases can be a catalyst forimprovements to rural economies.Furthermore, increased levels of education can result in growthby improving the capacity of local entrepreneurs. Generally,entrepreneurs in rural areas have relatively lower levels ofeducation and therefore lack the technical proficiency to gethigh growth out of their enterprises (Henderson, 2002). A moreentrepreneurial environment could also induce in-migration orretention of highly educated individuals who would otherwiseleave to find employment in urban areas (Camp and Ayres, 2013).With improvements to these and other employment conditions,the economic outlook for rural counties would brightenconsiderably. Hence, policymakers looking to improve economicconditions in rural Indiana would do well to focus their attention oneducational attainment.Table 4. Best-Performing Rural Counties (2010)Unemployment Rate(rural average: 8.9%)RankMedian Earnings(rural average: 27,282)Rank27.1%5 31,18819.866.9%3 29,1119Franklin12.0166.4%1 30,4652Spencer12.5176.6%2 30,01839.247.1%6 on1Posey4.42Gibson345Tipton* Based on the average of the educational deprivation rank, unemployment rank and median earnings rank.Source: Authors’ calculations based on data from the U.S. Census Bureau, 2007-2011 American Community Survey.Table 5. Worst-Performing Rural Counties (2010)4UnemploymentRate(rural average: 8.9%)RankMedian Earnings(rural average: 27,282)Rank339.4%32 25,0473921.43414.3%42 26,23930Orange21.73511.7%39 25,43436Washington24.6409.8%36 25,4623523.03913.6%41 n38Crawford20.039Jennings404142StarkeSource: U.S. Census Bureau, 2007-2011 American Community Survey.PURDUE EXTENSION1-888-EXT-INFOWWW.EXTENSION.PURDUE.EDU

Educational Attainment and the Rural Indiana Economy EC-776-WReferencesAyres, J., B. Waldorf, and M. McKendree. 2012. Defining RuralIndiana—The First Step. EC-776-W. -W.pdf.Ryan, C. L., and Siebens, J. (2012). Educational Attainment in theUnited States: 2009. orjas, G. J. (2009). Labor Economics, 5th edition. New York: Irwin/McGraw-Hill.Waldorf, B. 2006. “No County Left Behind? The Persistence ofEducational Deprivation.” Research Report, Purdue Center forRegional Development, PCRD-R-2. 2LR.pdfCamp, K., and J. Ayres. 2013. Unemployment Trends in Rural Indiana.EC-772-W. -W.pdf.Waldorf, B. 2008. The Emergence of a Knowledge Agglomeration:A Spatial-temporal Analysis of Intellectual Capital in Indiana.Chapter 6 in J. Poot, B. Waldorf and L. van Wissen (eds). Migrationand Human Capital. Cheltenham, UK, Northampton, MA, USA,Edward Elgar.Henderson, J. (2002). Building the Rural Economy with HighGrowth Entrepreneurs. Economic Review-Federal Reserve Bank ofKansas City, 87(3), 45-75.Henderson, J., and Abraham, B. (2004). Can Rural America Supporta Knowledge Economy?. Economic Review-Federal Reserve Bankof Kansas City, 89, 71-96.U. S. Census Bureau. 1970, 1980, 1990, 2000 Censuses of Population,and the 2006-2010, 2007-2011 American Community Surveys. Datacompiled by Alexander Marre, USDA ERS. -data-sets/download-data.aspx#.UoKZLFCsiSo.Marre, A. 2011. Nonmetro Areas Close in on Metro Areas in HighSchool Completion Rates, in Rural America at a Glance, 2011Edition, L. Kusmin, editor. Economic Information Bulletin, EIB-85.Economic Research Service, U.S. Department of Agriculture.About the AuthorsKevin Camp is a graduate research assistant and Brigitte Waldorfis a professor in the Department of Agricultural Economics atPurdue University. Her expertise is in demography, and she haswritten about a variety of population issues in Indiana, includingimmigrants, educational attainment, and poverty.For further information, contact Brigitte Waldorf at authors would like to thank Dr. Beth Yaeger and Jeff Sansonin the Department of Agricultural Economics for their review andhelpful comments.June 2014It is the policy of the Purdue University Cooperative Extension Service that all persons have equal opportunity and access to its educational programs, services, activities, andfacilities without regard to race, religion, color, sex, age, national origin or ancestry, marital status, parental status, sexual orientation, disability or status as a veteran.Purdue University is an Affirmative Action institution. This material may be available in alternative formats.TMLOCAL FACESCOUNTLESS CONNECTIONS1-888-EXT-INFO www.extension.purdue.eduEXTENSIONAGRICULTUREOrder or download materials fromPurdue Extension The Education Storewww.the-education-store.com5

into rural, rural-mixed, and urban categories, see Ayres, Waldorf, and McKendree, 2012.) Rural Indiana has the worst educational deprivation. Only 13.4% of rural residents had a college degree in 2010 (Table 2). The share of rural residents without a high school degree had decreased substantially since 1970, but it was still higher than the .

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