Meet the Author

Timothy Dunne |

Vice President

Timothy Dunne

Timothy Dunne is a former vice president and economist of the Federal Reserve Bank of Cleveland.

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Meet the Author

Kyle Fee |

Economic Analyst

Kyle Fee

Kyle Fee is an economic analyst in the Research Department of the Federal Reserve Bank of Cleveland. His research interests include economic development, regional economics and economic geography.

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07.10.08

Economic Trends

Differences in Educational Attainment across States

Timothy Dunne and Kyle Fee

Human capital is the term economists use to describe the skills and knowledge of a worker or, more broadly, of the workforce. It is a main determinant of economic growth for a country or a region. The relationship between economic growth and human capital is well established in economics (and is the subject of the Federal Reserve Bank of Cleveland’s 2005 Annual Report). While human capital is difficult to measure, economists often use data on educational attainment as a proxy for the amount of human capital in a region or country.

In the United States, there are considerable differences in educational attainment across regions and states. This is especially true when one focuses on differences in the share of the adult population with either four-year or advanced degrees. Currently, states with the lowest educational attainment levels include West Virginia and Arkansas, where the shares of the adult population with a four-year college degree are 16.5 percent and 18.2 percent, respectively. States with the highest educational attainment levels (above 35 percent) are in the Northeast and Mid-Atlantic, with Massachusetts and Maryland topping the list. In 2006, the most educated states had roughly twice the proportion of adults with a college degree compared to the least educated states.

A similar pattern is apparent when one examines the share of the population with advanced degrees—a master’s degree or above. About 1 in 10 adults over 25 years old has an advanced degree in the United States. Northeast and Mid-Atlantic states generally have high shares of adults with advanced degrees. Colorado and Washington also have relatively high shares. States with relatively low shares are located in the Mid-South and in the Northern Plains.

Of the Fourth District states, Pennsylvania has the highest share of adults with four-year college and advanced degrees, while West Virginia has the lowest. For both four-year and advanced degrees, Ohio is in the second-lowest quintile of states—ranked 38th for 4-year degrees, and 33rd for advanced degrees. Kentucky is in the lowest quintile in the case of 4-year degrees and second-lowest quintile in the case of advanced degrees.

Comparing the data from the 2006 American Community Survey to the 2000 Decennial Census, the average state increased the share of its adult population with a college degree from 23.8 percent to 26.3 percent—a 10.5 percent increase—as well as its share of those with advanced degrees, from 8.4 percent to 9.5 percent—a 13.1 percent rise. Depending upon the measure of variation used to describe the spread of the data, the overall across-state variation in education rates either held steady (the coefficient of variation) or rose (the variance). The difference between these two measures is that the coefficient of variation normalizes the variance by the mean of a variable and thus adjusts for the rise in the mean between 2000 and 2006. The key point is that this steady-to-rising variation in the state education data indicates that differences in state educational attainment rates persisted over the period 2000 to 2006.

Moreover, growth in the share of the adult population with a four-year degree also differed markedly across states. The growth rate ranged from a low of 4–5 percent for Wyoming and Colorado to a high of 16 percent for Kentucky and North Dakota. A closer look at the tails of the distribution for these growth rates shows that states with both high and low shares of adults with four-year college degrees appear at both ends of the distribution. For example, Colorado and Connecticut, states with high shares of degreed individuals, had relatively low growth rates, while other highly educated states, such as New York and Rhode Island, experienced high growth rates. A similar pattern is found for states with low educational attainment.

With respect to advanced degrees, the growth rates ranged from a low of 4 percent to a high of 20 percent. Examining the tails of the distribution, it is generally the states with low shares of advanced degree holders that populate both ends of the distribution. Idaho, Mississippi, and Wyoming experienced low growth, while the Dakotas and Kentucky had the highest growth rates. All these states had relatively low shares in 2000 and still have low shares in 2006. States with relatively high shares of advanced degree holders are also spread across the distribution, but these states do not appear in the extreme tails of the growth rate distribution.

Looking at Fourth District states, Kentucky and Pennsylvania have above-average growth in the share of the population with both four-year and advanced degrees, while Ohio had below-average growth in both categories. This is especially true in the case of four-year college degrees, where Ohio’s growth rate between 2000 and 2006 was the 11th lowest among the 50 states. Alternatively, West Virginia had somewhat higher growth in four-year degrees than the nation in the period 2000-2006, but lower growth in advanced degrees. However, even with this higher-than-average growth rate in four-year degrees, West Virginia remains the lowest ranked of the 50 states, with only 1 in 6 adults over 25 having earned a four-year college degree.