22 Center for American Progress The Economic Benefits of Closing Educational

22 center for american progress the economic benefits

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22 Center for American Progress | The Economic Benefits of Closing Educational Achievement Gaps period between 2014 and 2050. 69 Similarly, Medicare tax revenues for the Hospital Insurance Fund would increase by $265 billion, providing a substantial boost to the solvency of Medicare. 70 Th ese Medicare revenues would cover about 6 percent of the projected shortfall in the Hospital Insurance Fund in 2050 and a growing share of the projected shortfall in subsequent years. 71 Our projections understate the impact of closing achievement gaps for at least three reasons. First, we understate the impact of any reform on economic growth by making the implicit assumption that educational achievement improvements are limited to black and Hispanic children. In the real world, of course, policies that increase the educational achievement of black and Hispanic children are likely to improve the test scores of all children. Our projections probably underestimate the economic impact of closing achievement gaps by ignoring this fact. Second, our projections do not take into account any of the social bene fi ts, aside from economic growth, that are likely to occur as a result of the improvement in the cognitive skills of our people. Just like the research fi ndings on the bene fi ts of additional schooling, it is probable that higher levels of cognitive achievement are likely to produce many social bene fi ts, including improved quality of life, improved health, higher levels of civic participation, and lower crime rates. Finally, our model does not calculate the potentially positive e ff ects for children born to parents of the future who, because their cognitive skills are improved, will have higher incomes and be able to provide be tt er educational opportunities to their children. Hence, the children of future parents may be able to earn more and lead be tt er lives. If these generational e ff ects were properly accounted for, the bene fi ts of improving educational achievement may be substantially larger than those we have estimated in this study. Critics may argue that closing educational achievement gaps and fully phasing in the economic bene fi ts of improved educational outcomes could take less, or more, years than this simulation proposes. We agree. In general, the longer it takes to close achievement gaps and fully phase in the bene fi ts of a be tt er-educated population, the greater the cost in terms of the loss of potential economic bene fi ts. Th e point of this study was to estimate the bene fi ts of one speci fi c scenario and to illustrate that, whether it takes more or fewer years, the costs of failing to close educational achievements gaps are enormous, and they will grow with time. FIGURE 3 Impact of closing achievement gaps on Social Security and Medicare Cumulative increase in tax contributions to Social Security and Medicare between 2014 and 2050 in billions of dollars Social Security Medicare trust fund Source: Author's calculations. See "Methodology." $265 $877
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23 Center for American Progress |
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