Education and Other Human Capital

Human capital is the economic value of a worker’s skill set: education, experience and other abilities. Investments in workers raise their quality, which leads to improvements in productivity.

Regions competitive in the 21st-century economy are comprised of competitive companies, which in turn consist of competitive individuals. The more highly skilled a worker, the higher is the worker’s productivity. The educational attainment and skills of workers are more important than at any time in the past. Thus, a region’s educational infrastructure and the educational achievement of its residents are key components of regional competitiveness. Higher education in particular provides benefits not only to those individuals obtaining this advanced education, but to society as a whole.

February 2021
Investigates the factors associated with the population growth and prosperity of metro areas. Two measures of human capital—educational attainment and the STEM share of the economy—are among the factors that are significantly correlated to growth and prosperity.
October 2018
Estimates the average financial return on investment of a bachelor’s degree for men and women, examines the variation in the rate of return by field of study, and investigates the burden of student debt. The net present value of a degree is substantial, more so for men than for women, but varies considerably by the major field of study.
October 2018
Provides a broad evaluation of public education in Arizona, with comparisons to other states and the nation. In Arizona, per pupil funding, educational achievement, and educational attainment are below average, contributing to the low household incomes and high poverty rates experienced in Arizona.  
June 2017
Examines occupational data, focusing on the typical requirements to obtain an entry-level position in each occupation and making comparisons of Arizona and its subregions to broader geographies. The distribution of employment in 2015 across the 51 categories of requirements was not much different in Arizona from the nation.
March 2016
Compares the educational attainment of the workforce in Arizona to the nation and to other states and discusses educational attainment goals set by various organizations around the country. Arizona has experienced gains in the educational attainment of its workforce but the increases have not kept up with the nation, putting the educational attainment of Arizona’s workforce further below the national average.  
May 2015
Examines the level of educational attainment and the change over time by state and metro area. In 2013, the share of employed individuals between 25 and 64 years of age who had earned at least a bachelor’s degree was 32.1 percent in Arizona, less than the national figure of 35.7 percent. The Phoenix area ranked 39th among the 50 largest metro areas.
December 2013
Addresses a number of articles that have questioned whether higher education provides a high financial return. This analysis finds that the rate of return on a college investment decreased only modestly over the last decade and remains quite high.
August 2012
Discusses the individual and community benefits associated with educational attainment and reviews the educational attainment of Arizonans. Individuals benefit greatly from increasing their educational attainment, even after netting out the costs of education; those with more attainment earn more, pay more in taxes, and use public services to a lesser extent.  
January 2009
Reviews the lessons economists have learned from investigating growth experiences and income gaps across countries. A country or a region can grow in two ways: it can either catch up with the leading economies or it can be a leading economy itself. The first paradigm applies to many developing countries, whereas the second concept applies to U.S. states or regions.
November 2005
Summarizes educational attainment nationally and by state based on the decennial census, with a particular focus on those active in the labor force. Among the workforce, Arizona’s attainment was below average, particularly among young adults.  
October 2005
Provides an in-depth look at the benefits to individuals, the economies where educated individuals work and live, and society in general of enhanced educational attainment. Economies that have experienced substantial investment in either private or public institutions of higher learning have realized considerable growth and prosperity.
March 2004
Includes a discussion of the child-care industry and its economic impact, a literature review of early care and education, and the costs and benefits of an early care and education program in Arizona.

Related Articles and Reports

Education Pays 2019: The Benefits of Higher Education for Individuals and Society, College Board, January 2020

College Attainment, Income Inequality, and Economic Security: A Simulation Exercise, W.E. Upjohn Institute, January 2020

Talent-Driven Economic Development: A New Vision and Agenda for Regional and State Economies, Brookings Institute, October 2019

Research Note: Combining Early Education and K-12 Investments Has Powerful Positive Effects, Center on Budget and Policy Priorities, February 2019

Evaluating the Return on Investment in Higher Education, Urban Institute, September 2018

Educating a Workforce: Keeping Local Talent, Milken Institute, June 2018

From Preschool to Prosperity: The Economic Payoff to Early Childhood Education, W.E. Upjohn Institute, September 2014

Putting Productivity First, The Information Technology and Innovation Foundation, July 2014

Strong Start. Early Education in Arizona, 103rd Arizona Town Hall, November 2013

Troubling Trends in Arizona’s College Attainment Rate, University of Arizona, Economic and Business Research Center, September 2013

Higher Education Pays: But a Lot More for Some Graduates Than for Others, College Measures, American Institutes for Research, September 2013

A Matter of Degrees: The Effect of Educational Attainment on Regional Economic Prosperity, Milken Institute, February 2013

To Learn and Earn: Arizona’s Unfinished Business in Human Capital, Morrison Institute for Public Policy and Arizona Minority Education Policy Analysis Center, March 2009

America’s Perfect Storm: Three Forces Changing Our Nation’s Future, ETS (Educational Testing Service), January 2007

Estimating the Social Return to Higher Education: Evidence from Longitudinal and Repeated Cross-Sectional Data, Journal of Econometrics, 2004

Workers’ Education, Spillovers and Productivity: Evidence from Plant-Level Production Functions, University of California, Berkeley, January 2004