Investing in the younger generation: education is key to economic growth in Missouri

    Education blog

    Missouri has fallen to 38th in the nation in per capita gross domestic product (GDP). Our state’s students rank in the lower half of college and high school graduation rates and academic achievement on standardized test scores.

    Coincidence?

    Rik Hafer, professor of economics at Southern Illinois University of Edwardsville, says not.

    In Hafer’s essay, “Are Education and Economic Growth Related? Some Evidence from the States,” he states that “countries with higher levels of education, measured various ways, tend to be countries that experience faster economic growth and achieve higher standards of living.”

    What is economic growth? 

    Although the answer to this question may sound obvious, it is important to establish a common ground.

    Economic growth is a sustained increase in real income per person over time. This means that we are concerned with how the economy expands over time, not year-to-year.

    What we are measuring over time is some measure of income or output, such as GDP, adjusted for changes in prices and population. It allows us to focus on goods being produced, not how much they cost.

    Think of it like this: If your income doubles, but the goods you buy also doubles, then you are no better off.

    Producing something occurs when we combine human labor, machinery (capital) and knowledge. This combination causes economic growth.

    For example, when you buy a sandwich at a fast-food restaurant, you see the interplay between these forces at work: Someone takes your order, which is relayed via computer to the cooking station, where another person prepares your order using his or her knowledge of food preparation acquired through training in addition to the available capital of ovens, heating trays, etc.

    The more and better capital – ovens with precise timers and more predictable temperature control, and computers that keep better sales records, etc. – make workers more productive.

    So, more capital means better productivity. Better productivity means better worker output.

    However, this scenario falls apart if knowledge is lacking. If a worker does not know how to work a machine or take an order, the aforementioned labor and capital is meaningless; therefore, knowledge is the engine to economic growth.

    What measures knowledge? Cognitive ability vs. degree attainment

    States with higher percentages of college and high school graduates, Hafer finds, tend to have a faster-growing and more stable economy.

    When comparing the percentage of adults holding high school and college degrees, Missouri ranks in the lower half of states.

    Hafer finds an even stronger correlation between economic growth and scores on standardized tests taken by fourth and eight graders.

    Graduation rates measure how long someone stays in school, but does not measure what they have learned. So, it makes sense that the tests are a better representation of our students’ knowledge.

    “Even if two high school (or college) graduates spend the same number of years in the same school and acquire a diploma, this feat may not accurately assess their relative cognitive abilities,” Hafer says.

    Unfortunately, Missouri is ranked 27th out of 41 states for National Assessment of Educational Progress (NAEP) scores.

    Hafer asserts that a lack in academic achievement is the reason Missouri’s economic growth has been behind the pack in over a decade.

    “The blunt message from this study is that until the educational system in Missouri builds a stronger foundation of educational attainment and improving cognitive skills, do not expect long-term progress anytime soon in the state’s economic standard of living,” Hafer says.

    Educational attainment at the state level today affects a state’s future economic growth and standards of living. At a minimum, this means education policies should aim at improving graduation rates at both the high school and college levels and improving standardized test scores should be the focus of future economic policy for Missouri’s students.

    The future of Missouri’s economy is in our students’ and educators’ hands, but they need help from legislators. It might take years or even decades, but if Missouri takes the time and effort to invest in its education, it will inevitably invest in its economy.

    Christina Chastain
    Marketing and Strategic Partnerships Coordinator

    Claire Wright
    Marketing and Social Media Intern

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