What Is the Economic Impact of High School Choice?

When measuring the returns to education, economists tend to focus on attainment, typically the number of years of schooling. Most people, however, would concede that the quality of the schooling also matters. In a previous issue of The Regional Economist, Assistant Vice President and Economist Michael Owyang and former Senior Research Associate E. Katarina Vermann examined whether students attending different types of high schools have systematically different economic outcomes.

Owyang and Vermann used data from the National Education Longitudinal Study (NELS) to examine the relationships among high school characteristics, school type and wages. These data also includes information on each participant’s parents, high school teachers and administrators, providing information on each student’s academic life, social life/behavior, school environment, family environment and achievement. Specifically, Owyang and Vermann found that:

• Students who attended private and Catholic schools earned 13.1 percent and 13.9 percent more, respectively, than those who attended public schools.
• Students who attended urban and rural schools earned 5.3 percent and 10.8 percent less, respectively, than those who attended suburban schools.
• Students from schools with the lowest dropout rates and lowest percentage of students in remedial courses earned 11.8 percent and 0.7 percent more, respectively, than those attending schools with average rates.

However, the authors pointed out that there are three reasons this analysis may not conclusively determine whether these school factors matter.

Additional Wage-Influencing Factors

This analysis did not control for factors—such as industry, occupation and educational attainment—that could influence wages. Owyang and Vermann wrote, “Because wages vary systematically with these factors, simply attending a certain type of school does not guarantee a significant difference in earnings.”

Actual U.S. Demographics

In the NELS survey, 45 percent of respondents had at least a bachelor’s degree. According to the 2000 census, however, 25 percent of the general population held such degrees. The authors noted, “Since approximately 97 percent of the Catholic and private school graduates enrolled in some form of higher education (versus 82 percent of public school graduates), the estimates of average earnings could reflect wage premiums due to higher education rather than to quality of the high school.”

Additional School-Attendance Factors

In similar fashion to the wage-influencing factors mentioned earlier, the analysis did not account for factors that may influence or relate to differences between students at different types of schools. For example, individuals from high-income families may be less likely to attend inner-city public schools, while individuals from lower-income families may be less likely to attend expensive college preparatory schools.

In Thursday’s post, we’ll see how the story changes as the authors attempt to control for differences in student backgrounds, industry of employment and occupation.

Additional Resources

• Regional Economist: Measuring the Effect of School Choice on Economic Outcomes
• On the Economy: Rising Education Costs Have Had Little Impact on Household Budgets
• On the Economy: Five Simple Questions That Reveal Your Financial Health