Projecting the Baseline
The first step in estimating the effect of higher attainment on the economy is understanding what will happen if current completion rates are maintained. This assumption is considered the baseline for this analysis. The good news is that even if college completion rates do not improve, overall educational attainment levels for the working-age population, ages eighteen to sixty-nine, will increase as older generations are replaced by younger generations with higher education.
The potential for higher attainment even under the status quo is illustrated in Chart 2, which shows educational attainment at specific ages for cohorts of different birth years. Those born in 1980 to 1984, for example, have a higher level of education in their mid-thirties than the 1950 to 1954 cohort did at that age. As older cohorts age out of the working-age population, this progress will result in higher overall attainment.
Chart 2: Rising Share with a Bachelor’s Degree
Sources: U.S. Bureau of Labor Statistics and Moody’s Analytics
To estimate how much attainment will increase under the baseline, we first must project how much the most recent cohorts will achieve as they age. For example, we know that the 1980 to 1984 cohort is more educated than previous groups were in their mid-thirties, but what will happen as this cohort ages into the late thirties and beyond? To project this, we take the average growth in attainment for past cohorts for which we have data, and apply these growth rates to the most recent attainment rates for younger cohorts. For example, we know that 38 percent of people in the 1980 to 1984 cohort have a college degree at age thirty-three, the average age of this cohort in 2015. And we know from past cohorts that educational attainment usually goes up by around 0.5 percent at ages thirty-four, thirty-five, and thirty-six. From this we can project that attainment for the 1980 to 1984 cohort will progress to 38.5 percent, 39 percent, and 39.5 percent from ages thirty-three to thirty-six.
Chart 3 shows graphically how we are able to project attainment for each cohort in this way, with the dashed lines representing projected data and the solid lines representing the actual attainment to date. The baseline projections assume that for all cohorts born in 1995 and later, the life cycle of educational attainment looks like the attainment for the 1990 to 1994 cohort. In other words, the 1990 to 1994 cohort is as good as it will get under the baseline. As the analysis will later show, this assumption leads to a slowdown in the rate of improvement in the overall attainment rate compared with history (see Chart 9).
Chart 3: Projecting from Past Life Cycles
Sources: U.S. Bureau of Labor Statistics and Moody’s Analytics