Educational Attainment and Unemployment

Diego Mendez-Carbajo, Federal Reserve Bank of St. Louis,
Author Profile

Summary

Students will search for data on educational attainment and unemployment, mapping them and highlighting the relationship between human capital and employment outcomes.

Context for Use

This activity is appropriate for Principles, Introductory Microeconomics, and for elective courses such as Labor Economics and Development Economics.

Background knowledge on the topic can be supplemented through the materials listed in the "Information given to students." Instructors are encouraged to design Just-In-Time-Teaching questions to improve student preparation and target instruction (See here: https://serc.carleton.edu/econ/justintime/index.html).

Students must be able to follow directions on the GeoFRED site: search for data; modify the units; change the date range; choose map colors; and edit the legends.

To preserve class time for activities in which there is great benefit in face-to-face interaction, the instructor could copy the map-building instructions into a handout and assign that work as out-of-class preparation.

No class size limitations.
Time needed for the activity: 30 minutes.
Should not need more one class period.
Self-standing activity.

Overview

Students search for data and visualize them in GeoFRED, the Federal Reserve Bank of St. Louis online mapping tool. The learning goals of this activity are: (1) to observe patterns in economic data and note differences across geographical areas; (2) hypothesize the reasons for those patterns and differences.
The intended outcome of the activity is the illustration of the relationship between educational attainment and unemployment and the of existing explanations of the reasons for this relationship.

Expected Student Learning Outcomes

In this exercise students will be able to:
1. Observe an inverse relationship between educational attainment and unemployment across U.S. counties;
2. Evaluate the reasons for the observed inverse relationship between educational attainment and unemployment.

Information Given to Students

Go to the following web address and watch the video: https://www.stlouisfed.org/education/economic-lowdown-video-series/episode-10-unemployment

On the GeoFRED website, https://geofred.stlouisfed.org/, create a map by following these instructions:
1. Click on "Build New Map"
2. Click on "Tools"
3. Click on "Choose Data" and select "Region Type: County"
4. Select "Data: Bachelor's Degree or Higher (5-year estimate)"
5. Select "Year: 2017"
6. Click on "Choose Colors" and select "Single Hue: Oranges"
Open a new browser tab, go to the GeoFRED website, and create a second map by following these instructions:
1. Click on "Build New Map"
2. Click on "Tools"
3. Click on "Choose Data" and select "Region Type: County"
4. Select "Unemployment Rate"
5. Select "Frequency: Annual" and "Average"
6. Select "Year: 2017"
7. Click on "Choose Colors" and select "Multi Hue: rdpu"

Examine the maps and hypothesize the reasons for the observed relationship between unemployment and educational attainment.

Rank the following factors in order from the most likely to influence the observed relationship between unemployment and educational attainment to the factors least likely to influence the observed relationship.

A. College graduates work longer hours;
B. More abundant employment opportunities for college graduates;
C. More education can lead to earning more income;
D. College graduates have higher human capital.

Work in two phases: first, identify and discuss the most important factor; second, identify and discuss the least important factor.

Teaching Notes and Tips

Figure 1. 2017 Bachelor's Degree or Higher (5-year estimate) by County. http://geof.red/m/heD

Figure 2. 2017 Unemployment Rate by County. http://geof.red/m/bEM

What prefatory remarks should set up the application exercise?
The relationship between high educational attainment and success in the labor market is frequently emphasized at the microeconomic level. Rather than simply admonish students to "stay in school", this exercise allows students to visualize the macroeconomic relationship between educational attainment and unemployment. The goal of this exercise is to encourage students to think about the reason for such negative correlation.

What kinds of strategies are recommended for facilitating reporting and inter-group conversations?
The instructor should direct student groups to work in two phases: first, have team reporters identify and discuss the most important determinant factor; second, have team reporters identify and discuss the least important determinant factor.

What kinds of follow-up questions are recommended for facilitating the debriefing conversation among team reporters?
On the first map, the lighter orange colors indicate counties with lower proportions of the population with bachelor degrees or higher. On the second map, the darker purple colors indicate counties with higher unemployment rates. Don't overlook Alaska!

College graduates have higher human capital. In an economy that produces more services than goods, higher human capital allows college graduates to pursue a wider variety of job opportunities. Although more education can lead to earning more income, more income does not lead to lower unemployment. Finally, whether or not college graduates work longer hours is not relevant here.

What points should be emphasized in the instructor's summary remarks to conclude the exercise?
A. Urban centers have high concentrations of population with high degrees of educational attainment;
B. Agricultural areas in the Central U.S. have low unemployment;
C. High population-density areas on the coasts have both high unemployment and high concentrations of population with high degrees of educational attainment;
D. In the South of the U.S., low concentrations of population with high degrees of educational attainment and high levels of unemployment are clearly visible.

Assessment

The instructor would judge team answers based on the quality of arguments presented:
1) Similarities in low proportions of the population with bachelor degrees or higher and higher unemployment rates are observed;
2) Education increases the skills of workers and facilitates their continued employment –reducing the likelihood of being unemployed;
2) Compelling arguments are presented in the ranking of reasons for the observed correlation.
The following essay question could be asked as a follow-up to the exercise:
Educational attainment and unemployment are negatively correlated. What economic argument(s) can explain this relationship? Explain your argument(s) carefully.

References and Resources

https://www.bls.gov/careeroutlook/2016/data-on-display/education-matters.htm
https://fredblog.stlouisfed.org/2014/03/unemployment-rates-by-educational-attainment/