The Benefits to Taxpayers from Increases in Students - RAND ...

54 The Benefits to Taxpayers from Increases in Students’ Educational Attainment
Our findings on unemployment compensation are different from those on social
support programs because of the fundamentally different economics of this program.
Social support programs are generally means-tested: As the education level of an individual
increases, that individual becomes less eligible for the support program. And
the amount of a beneficiary’s subsidy is not related to how competitive he or she is in
the labor market. Unemployment Insurance is an exception in that the level of compensation
received depends on the person’s last salary, which in turn depends on that
person’s level of education.
In other words, increased education reduces the likelihood of being unemployed
and lowers the utilization of Unemployment Insurance. On the other hand, increased
education also increases the amount of the benefit that an individual receives from
Unemployment Insurance when he or she does draw on the program.
Our analysis shows that an individual’s level of education and gender determine
whether or not he or she is likely to use Unemployment Insurance. For men, high school
graduates account for the highest spending in the Unemployment Insurance program
and high school dropouts account for the lowest for all race/ethnicity groups.
For our example of a U.S.-born Hispanic woman (Figure 4.7), the findings are
less clear-cut. Such a woman would account for the highest Unemployment Insurance
spending if she is between ages 30 and 50 and has had only some college.
In light of these findings, turning a high school dropout to a college graduate
does not seem to yield a saving for the public budget with respect to Unemployment
Figure 4.7
Expected Annual Unemployment Compensation for a U.S.-Born Hispanic Woman
140
Expected annual compensation (2002 $)
120
100
80
60
40
20
Less than high school graduate
High school graduate
Some college
Bachelor’s degree or more
RAND MG686-4.7
0
20 25 30 35 40 45 50 55 60 65 70 75
Age