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Researchers: Having More College Grads Around Doesn't Mean Less-Educated Workers Earn More

'Human capital spillover' effects not found

Researchers from Georgia State University and the University of Michigan have found that having a higher proportion of more highly educated individuals in a metropolitan area is not necessarily associated with higher pay for those without a college degree. Their findings may have implications for the incomes of low-skill workers in Detroit and other cities in Michigan, as well as for public policies that aim to increase college attendance.

University of Michigan economist Don Grimes and Georgia State University professors Mary Beth Walker and Penelope Prime wrote the study, titled “Exploring Wage Determination by Education Level.”

The study stated: “In contrast to anecdotal evidence using simple correlations and some more formal studies that have been done to date, using a representative individual we were not able to find significant human capital spillovers to wages due to having an educated community.”

Grimes explained the significance behind the phrase “human capital spillovers.”

“In a place like Detroit, it means that as the city adds more college-educated residents, it will improve the city's overall level of income, and I am all for that. But sadly, it won't raise the real income of the less-educated residents of the city, and I think there was some ‘hope’ based on these earlier studies that it would,” Grimes said in an email.

Grimes added: “I guess you can't just make the less-educated population financially better off simply by adding more-educated residents. The community overall will be better off because it will be richer and that will create some ‘wins’ for the less educated, but the less educated aren't simply going to get paid more because of those better-educated residents, at least once you control for the cost of living, and some other stuff.”

According to the U.S. Census, 13.1 percent of Detroit residents age 25 and older have a bachelor's degree or higher from 2010 to 2014.