Graduate Program

Economics

Degree Name

Master of Arts (MA)

Semester of Degree Completion

2009

Thesis Director

Linda Ghent

Thesis Committee Member

Hui Li

Thesis Committee Member

Tim Mason

Abstract

Rural areas are less developed than urban. It is well known that rural workers are more likely to suffer from the lower wages than their counterparts from metro areas. Policymakers wrestle with the issue of "brain drain" in rural areas and, therefore, a loss of tax income in rural counties. "Brain drain" happens when professionals leave rural counties for metropolitans to earn higher returns to education. This thesis will shed light on some sides of rural development connected with the returns to education.

The main goal of this research is to estimate and compare wages and returns to education in rural areas with those in urban areas across the United States of America. Using state-level data from the Current Population Survey, the returns for four levels of education and a comparison between then are drawn for those in rural areas with those in metro areas. A Mincer-wage equation is estimated, using the Heckman selection model to correct for selectivity bias. The results indicate that rural workers enjoy much lower returns to education for all four educational levels than their urban counterparts.

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