Explore Tucson's Neighborhoods

Author(s)
Alan Hoogasian, Research Economist
Published
07-21-2016

The strong connection between educational attainment and earning potential has long been noted. The general rule is that more education leads to more income. Like a firm investing in better technology to increase productivity in the future, an individual’s investment in their potential through education, or human capital investment, allows for greater earning potential in the long run.

For instance, a 2011 study by the Georgetown University Center on Education and the Workforce estimated that the median lifetime earnings of a bachelor’s degree holder is nearly twice (1.7 times) that of an individual with a high school diploma. As educational attainment increases, the effect becomes more pronounced. The median lifetime earnings of a master’s degree holder is twice (2.04 times) as much; earnings by holders of doctoral and professional degrees are 2.49 and 2.79 times higher than a high school diploma holder, respectively.

We see this connection playing out in the Tucson Metropolitan Statistical Area (MSA) when we look at educational attainment and income by Census tract. In 2014, 30.1 percent of the population in the Tucson MSA over 25 years of age possessed a bachelor’s degree or higher. This figure is 0.8 percentage points above the U.S. and 3.0 above the state. Breaking educational attainment down by Census tract allows us to see how it varies in the metro area. Figures in the Tucson MSA range from 2.1 percent to 71.6 percent. As the map below illustrates, higher rates tend to be located in the northern, northwestern and eastern fringes of the metro area. Lower rates tend to be concentrated in the south and inner city. 

The interactive map below illustrates the geographic distribution of educational attainment and income by tract in the Tucson MSA. As with educational attainment, the highest values are located in the north, northwest, and eastern regions. Per capita income ranges from a low of $4,793 to a high of $68,747. Income reflects earnings from work, asset income (dividends, interest, etc.), and money transfers (social security, welfare payments, etc.) The following maps show median household income, and median earnings for workers in the past 12 months for individuals, which ranged from $3,160 to $65,129. All values are in 2014 inflation adjusted dollars.

Figure 1. Educational Attainment and Income by Census Tract in Pima County.

 
 
- 100% - 0%
- $100K - $0

As we can see from both the educational attainment and income maps above, Census tracts with higher rates of educational attainment tend to be associated with higher incomes. This relationship becomes even more evident when the two indicators, education and income, are examined together. The graphs below show the relationship between educational attainment and per capita income, as well as median earnings. 

Educational attainment is plotted on the horizontal axis, and income on the vertical. Note that the line depicted on the graph slopes up. This indicates that Census tracts with higher rates of educational attainment are associated with higher income and earnings levels. Click on the graph to see the underlying data and positive slope (each dot represents a Census tract in Pima County).

Figure 2. Higher Educational Attainment Means Higher Income.

 

In summary, access to higher education is important and achievement of a college degree has tremendous benefits in terms of lifelong earning potential. Moreover, the benefits are growing over time. As one researcher recently noted the return on investment for getting a college degree is higher than ever.  For example, the wage gap between a family of high school graduates, and one of college graduates grew by an inflation adjusted $30,000 between 1979 and 2012. There are also challenges however, such as the growing cost of higher education. Keep in mind that other factors can impact the bottom line of college graduates, including choice of major, and geographic mobility. While it is no guarantee of success, getting a college degree remains one of the most powerful predictors of future income.

Citations

Carnevale, A. P., Rose, S. J., & Cheah, B. (2011). The college payoff: Education, occupations, lifetime earnings.
Porter, E. (2014). A Simple Equation: More Education= More Income. The New York Times.
Image of mortarboard and dollar sign courtesy of Wikimedia Commons