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The source of Lake Wobegon?

Minnesota's education investments in the 1940s and 1950s

Rob Grunewald - Associate Economist
Alison Sexton - Research Assistant

Published October 28, 2010

Like residents of many states, those in Minnesota like to think of themselves as special, even above average across the board as Garrison Keillor likes to put it.

Minnesotans, however, have some notable achievements behind their bravado. For example, the state ranks high in per capita income (13th in 2009) and education attainment (third for high school degree and 10th for college degree in 2008).

That wasn’t always the case. In fact, Minnesota used to be quite average on both measures. As noted by Terry Fitzgerald in the June 2003 issue of The Region, from the late 1920s to the mid-1950s, Minnesota ranked about the middle of the pack in per capita income and education attainment.

However, beginning in the 1960s, the state began to outperform the national average in both categories. Minnesota per capita income went from 5 percent below the national average in 1960 to 6 percent above the national average in 2009. In addition, the percentage of population with a college degree went from even with the national average in 1960 to 31.5 percent in 2008, 3.8 percentage points above the national average.

So, what changed in or around the 1960s that led to Minnesota’s relative gains in income? While industry composition (moving from lower-paying farm sector jobs to higher-paying jobs in urban areas) certainly changed, it doesn’t seem to explain much of the income gains.

Two key clues come from rising labor force participation and productivity in Minnesota—outcomes often associated with rising education and worker skills. If Minnesota workers started showing stronger gains in education and skills in the 1960s, it’s useful to look for policies that helped achieve such an outcome.

For example, data on education investment during the late 1940s and 1950s show that Minnesota policymakers emphasized such investment. Education expenditure in Minnesota was higher than the national average, ranking 17th among states in 1941-42 and 11th in 1957-58, according to figures from the Biennial Survey of Education in the United States. Minnesota also had impressive investments in education-based capital outlays, increasing from a ranking of 24th in 1941-42 to fifth in 1957-58, when the state spent more than 50 percent more per enrolled child than the nation (see chart).

Chart

Another explanation for Minnesota’s gains in education attainment is migration—highly educated workers moved to Minnesota from other states. As the Minnesota economy grew stronger, it attracted educated workers from across the country. However, based on data from the 1980s and 1990s, migration seems to account for only a modest portion of Minnesota’s education attainment gains. That is, while more educated people moved to Minnesota than left the state, the net inflow wasn’t large enough to fully account for Minnesota’s gains.

While the analysis does not prove that relatively higher levels of education spending from 1945 to 1958 caused Minnesota’s increase in education attainment and per capita income over the subsequent four decades, the analysis does suggest that education investments Minnesota made during the 1940s and 1950s may well have contributed to subsequent strong economic performance.

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