Rich Vedder and one of his young colleagues have recently completed a paper for Michigan’s Mackinac Center that takes a look at the idea that prosperity can be increased by raising state spending on higher education.

The authors conclude that if Michigan wants to increase economic growth, more spending on higher education would be counterproductive.

A key finding: although Michigan, over the period 1980-2000, spent significantly more per capita on higher ed than did other large midwestern states (Ohio and Illinois, specifically), its rate of economic growth lagged behind.

To many people, this conclusion will seem strange. People with college degrees make more money than people without them — right? Vedder explains that much state spending on higher ed goes for things that have nothing to do with educating students and observes that “More appropriations may merely lead to small increases in enrollments among marginally qualified students who then fail to graduate.”

I would only add that even if they graduate, the labor market is already glutted with young people with college degrees and many of them end up taking jobs that don’t call for any academic preparation, frequently after going to a community college to learn some marketable skill.