An ordinary least squares (OLS) regression method was used to evaluate the relative importance of high school dropout rates and other economic factors that could explain the economic development in West Virginia, as represented by the employment rates. The empirical results revealed that an increase in the high school dropout rates and the State GDP increased the employment rates while the increase in unemployment compensation decreased employment rates. Thus, the increase in the employment rates may likely be on unskilled and low paying jobs.
West Virginia has traditionally lagged behind other states by virtually any measure of human capital development, and still contains a solid block of counties with low educational attainment (Gebremedhin, Odell, 1996). The state also faces constant economic decline consistent with those found in rural areas nationwide. Despite an increase in the government expenditure on human capital formation through investment in education, West Virginia continues to have one of the nation's highest and chronic high-school dropout rates, and is among the states with the highest unemployment rates. Students are dropping out of high school without any regard for future adverse economic effects. It is reasonable to assume that the chronic high school dropout rate is closely associated with the lack of job opportunities in the state and constitute a threat to future economic development of West Virginia.
Despite the increases in government expenditures on investment in education for human capital formation, one of the major social and economic problems confronting the state of West Virginia is the persistent high school dropout rate. According to the National Center for Educational Statistics (USDA, 1995) the high school dropout rate in West Virginia was around 16 percent between 1993-94 compared to 11 percent at the national level in the same years. These relatively high high-school dropout figures might be a strong indicator of the future shortages in the number of students adequately prepared for entry into the labor force. This situation may create a mismatch between the types of jobs available and the skills and education of West Virginia's labor force.
Bickel et al., (1991) contend that nearly 40 percent of all students dropped-out before reaching 8th grade, and only 33 percent of the West Virginia's high school graduates enrolled in college or university. In 1994, though the high school graduation rate increased, the percentage of those graduates who enrolled in colleges or universities decreased to 24 percent (Almanac of Higher Education, 1995). Comparing high school dropouts and high school graduates, studies by the Bureau of Census (1990) indicate that high school dropouts consistently have higher unemployment rates than high school graduates. For example, in 1990 about 36 percent of the high school dropouts were unemployed as compared to 21 percent of high school graduates. According to the Indiana Career and Post- secondary Advancement Center (ICPAC, 1998), in 1997 9.4 percent of high school dropouts were unemployed as compared to 5.4 percent of high school graduates and 1.7 percent of college graduates.
Other studies (U S Department of Education, 1996) have also shown that high school dropouts who succeeded in finding jobs earn less money compared to high school graduates. For example, the National Center for Educational Statistics (1997) indicates that in 1987 high school dropouts earned $0.67 for every dollar a high school graduate earned; however, in 1995 high school dropouts earned only $0.48 for every dollar earned by a high school graduate. To this effect, increased investment in education, as indicated in various studies, is associated with declines in the high school dropout rate and increases in workers' skills which result in a more productive labor force that is vital for rural development and economic growth.
The high rate of high school dropouts not participating in the labor force have no future perspective in terms of job opportunities, and may constitute a threat to the economic development of West Virginia. …