The Economic Impact of Increasing College Completion

Direct Aggregate Earnings and Employment Effects

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Sophia Koropeckyj, Chris Lafakis, and Adam Ozimek
Commission on the Future of Undergraduate Education

Combining the estimates of the individual gains from completing bachelor’s and associate’s degrees with the baseline and scenario forecasts of attainment allows the estimation of direct aggregate earnings and employment effects. Because of the larger gains from a bachelor’s degree, the effect is larger than for an associate’s degree. By 2046, aggregate earnings are 2.7 percent higher because of a greater number of bachelor’s degrees and 0.4 percent higher because of a greater number of associate’s degrees, for a combined 3.1 percent increase.

The direct employment effects are also substantial, with a bachelor’s degree increasing the odds of an individual being employed by 4.3 percent and an associate’s degree increasing the odds of employment by 4.4 percent. However, initially employment is lower as more forgo working and enroll in school. As the positive employment effects eventually offset the negative enrollment effect, this translates to 0.3 percent and 0.2 percent increases in the employment-to-population ratio by 2046.