The Impact of New College Graduates on Intrastate Labor Markets

Abstract

A crucial issue in the debate on state support for higher education is the extent that a state?s production of college graduates affects the state?s education attainment. The view that many new graduates take their state-supported degrees to labor markets in other states undermines states? incentives to promote wider access to college. This study offers reasons to be skeptical of this view, and develops a simple framework to quantify the intrastate labor-market effects from the production of new college graduates.

Data from the Integrated Postsecondary Education Data System and the Current Population Survey are used to quantify the effects of new graduates on states? net migration, employment, unemployment, labor force non-participation, and wages of college graduates. The results indicate that a state?s production of college graduates has a nearly proportionate impact on the state?s college attainment.