Return on Investment: Educational Choices and Demographic Change in California's Future

Shannon Gleeson, University of California, Berkeley
Iris Hui, University of California, Berkeley
Michael Hout, University of California, Berkeley
Jon Stiles, University of California, Berkeley

This paper explores the implications of education for California's changing population. In a static analysis, we focus on how educational attainment and movement through the educational pipeline are structured by age and ethnicity. We look at which educational transitions impact specific outcomes of well-being in 2000, and highlight differences by ethnicity. We differentiate three classes of effects: personal benefits, collective benefits, and fiscal effects for the state. Through a synthetic projection analysis, we highlight the interaction between educational attainment and the rapid growth of educationally disadvantaged groups. We explore four scenarios of change. Our findings are quite clear and very powerful: California's declining per-capita personal income relative to the national average can be reversed by setting realistic goals for greater investments in public higher education. Moreover, these investments will pay for themselves in increased tax revenues and decreased expenditures for social welfare, crime control, and other expenditures.