Monroe Community College Program Based Economic Impact Analysis, January 2015

Appendix A: About the Model and Data

example, many professional occupations, such as law- yers and professors, will continue to see appreciation in annual earnings late into their working careers, whereas occupations that require intense physical labor such as electricians and automotive repair see peek wages much earlier in their careers. Likewise, some workers, such as those in management and education, experience a greater return for educational attainment than other types of workers. Another methodological component that EMSI considers in this analysis is counterfactuals, or opportunity costs. Essentially, counterfactuals are deductions from gross measurements to account for alternate possibilities. These deductions account for positive effects that would have manifested even without the presence of the thing being measured. The challenge in this case is to determine what pro- portion of the total economic impact generated by MCC alumni should be attributed to the education these individuals received at MCC. In other words, what are these MCC alumni doing in the economy that other workers could not do? Cursory reflection is enough to reveal that in most cases employers have the option to substitute one type of worker for another. For example, if a hospital is unable to find a qualified registered nurse, methods of operation could be adjusted so that workers of other occupational categories (e.g.: nursing assistance, LPNs, etc.) could take on the work that would have been assigned to the registered nurse. The ease with which businesses can replace the knowledge, skills, and abilities of one

METHODOLOGY In this report, EMSI aims to assess the economic impact of twelve Monroe Community College (MCC) academic programs on the local economy. EMSI also has a college-wide economic impact study (EIS) that analyzes the broad impact of the college in terms of college operations, student spending, and student productivity. The strength of the EIS model is that it encompasses all forms of impact that a college may have on a community, but it lacks the ability to narrow in on specific impacts of particular programs. This study focuses on the economic impacts gener- ated by students from twelve specific programs, with particular focus on their future productivity in the workforce. The unique challenge of the program specific model is predicting the lifetime earnings curve of workers by occupation. Research on the relationship between earnings, education and experience extends back to economist Jacob Mincer, who first explored the issue in the 1930s. At the time, he developed a model to explain how education and experience affects earnings, later to be termed the Mincer Curve. Since that time, economists have continued to use and improve upon the tools developed by Mincer, but EMSI is the first to integrate occupational specific effects into its model. This is critically important for producing a program specific economic impact model because individuals in different occupations receive different returns on education and experience. For



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