Supporting Advanced Manufacturing Growth – How do Community Colleges Respond to Local Economic Development Investments?

• In Event: Community Colleges in Changing Labor Markets: Enrollment Trends and Workforce Alignment

Abstract

Prior to the global pandemic, the U.S. experienced a sharp decline in the number of manufacturing jobs across the country. Since 2021, recent federal legislation, such as the CHIPS and Science Act, the Inflation Reduction Act, and the American Rescue Plan, has sought to revolutionize American manufacturing and increase our domestic manufacturing capacity. This heightened attention on bolstering American manufacturing production has led to increases in production technology and demand for more skilled labor within the advanced manufacturing sector. The increased demand for skilled manufacturing labor is particularly true in states like Kentucky who have seen significant private economic investments in advanced manufacturing in recent years. According to the U.S. Bureau of Labor Statistics, Kentucky’s employment in the manufacturing sector has increased 25 percent since 2010. 

This paper seeks to understand how responsive two-year community colleges are to changes in local workforce demand. To understand how local community colleges respond to changes in economic conditions, I utilize Kentucky’s Financial Incentives Database provided by the Kentucky Cabinet for Economic Development. This provides information on firms that receive state economic development funding. I restrict this to only include manufacturing projects with a minimum state investment of $100,000. Each project is geographically linked to a local community college and a primary newspaper search is conducted to determine when the economic development project is publicly announced. Community college responsiveness is captured through certificate and associate degree completion within 11 advanced manufacturing programs provided by the National Center for Education Statistics’ Integrated Postsecondary Education Data System (IPEDS). I also control for county level characteristics. 

In this analysis, a two-way fixed effects model is used and local economic investment timing is defined using the first announcement of a manufacturing project funded through a Kentucky economic incentive grant. Due to variation in treatment timing, a stacked difference-in-differences approach is used. A triple difference-in-differences approach exploiting program level variation is also deployed. Preliminary evidence suggests that community colleges are responsive to local economic investments in Kentucky. On average, community colleges in the post treatment period experience an increase of 108 manufacturing credentials, which roughly represents a 15% increase in credential completion.  However, significant effects are not seen until year four in the post-treatment period which suggests that the majority of this effect is driven by community colleges that experienced the first economic investment early in the sample period and is largely being driven by short-term certificate completion.

Based on initial findings, community colleges experience an increase in manufacturing credential completions in years post economic investment. It is uncertain if this is being driven by student demand or if community colleges are proactively creating new programs. Several limitations exist, such as limited sample size and the inability to capture intensity of treatment. Future research will work towards mitigating these limitations and will seek to identify whether a community college proactively expands programs or is simply responding to increased student demand for programs. 

Author

• Emily Wilcox Walls, University of Kentucky
  Presenting Author