High School Dropouts
What is the cost of quitting school? Most teenagers don't understand the long-term effects or opportunity costs associated with dropping out of high school. In an article by Christine MacDonald and Brad Heath of the Detroit News, the major opportunity costs not only to the student but also to the society are lower wages, costs of adult education, and higher taxes. MacDonald and Heath estimate that a high school dropout will earn $19,900, a high school graduate will earn $25,100, and a college graduate will earn $35,500 per year. Dropouts will have a 9% higher unemployment rate and 13% will live in poverty.
The cost of a high school dropout to Americans will be 38.2% of a greater chance they will be on public assistance. Is it beneficial to the government to spend more money now to keep students in school or let them drop out and continue providing some type of assistance; perhaps for their entire lives? Also, how do you convince taxpayers that spending the extra money now will save them in the long run?
2 comments:
I would like to think from an individual’s view. The cost of going to colleges or universities is very high nowadays. I totally understand that people tend to drop off from college and join the labor market to make some money. There are several generalizations from the model of human capital that affects the educational investment decision.
1. Other things being equal, the longer the stream of post-investment incremental earnings, the more likely the net present value of an investment in human capital will be positive.
2. Other things being equal, the lower the cost of a human capital investment, the larger the number of people who will find that investment to be profitable.
3. Other things being equal, the larger the college-high school earnings differential, the larger the number of people who will invest in a college education.
In addition, college enrollment tends to increase during an economic recession because of the lower cost of a college education. If the government would like to encourage people to go to school, I would recommend them to provide low-interest rate loans for students and decrease the cost of a public school education.
This actually made me wonder what the opportunity cost is for us to attend college nowadays. If a college graduate only makes $10,400 more a year than a high school graduate, is it worth it for us to forgo those extra 4 years of income to attend a private school? A high school graduate must decide if they want to spend 4 years making $100,400 or pay (before financial aid) $129,928. On a college graduate's average salary, it will take more than 3 1/2 years to pay back the dollar amount cost for college. That is assuming that the graduate does not need any of the money they make to live on in those 3 1/2 years. I think today college has a high opportunity cost unless one continues their education (through another degree, graduate school, masters, PHD's, etc.) in order to have higher human capital than their fellow college classmates.
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