IZA DP No. 8730: The Production and Stock of College Graduates for U.S. States
revised version with different title forthcoming in Papers in Regional Science
The stock of human capital in an area is important for regional economic growth and development. However, highly educated workers are often quite mobile and there is a concern that public investments in college graduates may not benefit the state if the college graduates leave the state after finishing their education. This paper examines the relationship between the production of college graduates from a state and the stock of college graduates residing in the state using microdata from the decennial census and American Community Survey. I examine the relationship across states and across cohorts within states. The descriptive analysis suggests that the relationship between the production and stock of college graduates has increased over time and is nearly proportional in recent years. I also employ instrumental variables methods to estimate causal effects. The preferred IV results yield an average point estimate for the production-stock relationship of 0.52, but the effect likely decreases with age.