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State governments always want graduates who received higher education in universities and colleges to stimulate the economic growth of the state. Many state universities want to contribute more to the state’s economy as well, and state universities frequently have relevant economic development activities and offices. The state universities normally receive annual budgeted financial support and occasional special funding from the state government while the state expects contributions to the economic growth and an educated citizen in return. In this research, the economic impact of a graduate degree funded by the state government was considered in the state of Nebraska.
Simulation models were utilized to attain the goal of the research. In the simulation models, the salaries of graduate engineers and the money spent by employed graduate engineers were considered, and the taxes paid by the graduate employees were used as the basic indicator to assess the direct economic impacts received by the state government. The computer simulation model was validated and verified. The simulation model utilized historical spending data patterns and calculated the Nebraska state and federal income taxes directly paid by graduates and indirectly paid as a result a of their spending, and it was economically justified to support the advanced education. The state government can regain their financial support of the university via state taxes paid by the graduates alone. Using spending simulation, it was determined that it was not beneficial for the government to reduce the income tax rates in hope of generating secondary spending to recover the tax losses by a stimulation of spending. Even if the sales taxes obtained by the government were increased, the amount cannot make up for the decreases of the income taxes.
Advisor: Michael W. Riley