Rural America’s best export is its young people. Demographic patterns for decades show that the better a rural community educates its children, the more likely they are to seek jobs, careers, and a life elsewhere. K-12 education across the nation is substantially financed by local property taxes. A community does not gain a return on their tax-funded investment from graduates who leave to work and pay taxes elsewhere. The returns to the educational investment made by rural residents accrue largely in areas that are not rural. How the Returns to Education in Rural Areas Vary Across the Nation, a Penn State University study, finally measures how much this population shift harms rural areas (and benefits urban areas). It quantifies how little rural communities get in return for their contribution to the education of their children. Focusing on per capita income in rural and urban counties for those 25 and older with a high school diploma or a higher degree, the study finds that returns to education are over three times higher in urban areas than in rural areas.

In other words, increasing the number of people in a rural community with a high school diploma or higher brings about less than one-third the increase in income as does the same increase in educated people in an urban area. Returns to education were lowest in rural areas of the Midwest (and highest in rural areas of the West). This is particularly ironic since rural schools in the Midwest have among the highest performance measures of any schools in the nation.

These findings have significant consequences. If rural communities get less return for their school property taxes, there is potentially less support for public education as the tax burden is placed on fewer people. If returns to an individual’s educational investment are so much higher in urban areas, the pattern of educated young people leaving rural areas is sure to continue and accelerate.

Communities deprived of educated residents also face challenges in workforce attraction, retention, and economic development. The magnitude of the gap in returns to education shown by the report demonstrates the magnitude of the problem and challenges faced by rural communities. Public policy should place more emphasis on the need to develop rural economic opportunities, particularly those that pay enough to provide a return on the community and individual investment in education.

Contact: Jon Bailey, jonb@cfra.org or 402.687.2103 x 1013 for more information on the Center’s research and analysis program.