The social returns to increased investment in education: Measuring the effect of education on the cost of social programs
Record numbers of students are enrolled in America's elementary and secondary schools, and the number of students seeking higher education is growing dramatically. Within the context of this overall increase in demand for education, disparities in educational achievement across groups within society persist as the educational attainment of blacks and Hispanics continues to lag behind that of whites. The black and Hispanic population is growing more quickly than the population in general, due to immigration and higher birth rates. Unless the educational achievement of these groups is improved, a growing segment of society will have relatively little education.
This research estimates the social returns to policies that eliminate the disparities in the educational attainment of whites and that of blacks and Hispanics. It begins by estimating the relationship between educational attainment and the use of a variety of public programs. Individual-level data on program participation rates and annual benefit amounts are used to estimate the relationship between educational attainment and income from public assistance and social insurance programs, including welfare, SSI, Food Stamps, unemployment benefits, Social Security, Medicare, and Medicaid. The effect of educational attainment on incarceration rates is also estimated, as is its effect on state and federal tax revenues. Next, a cohort population model is used to estimate the additional amount of schooling required to eliminate the gap between the educational attainment of whites and that of blacks and Hispanics. Finally, this estimate is combined with the estimates of the relationship between educational attainment and that of public spending and revenues to estimate the effect of the elimination of this gap on the cost of government programs and tax revenues. Over the life of a cohort, the reduction in government spending and the increase in federal and state tax revenues due to the additional education is between 2 and 3 times the cost of the additional education. If the effect of education on private income is included, the benefits of the additional education are almost 5 times its costs.
0277: School finance
0514: School administration
0340: Educational sociology