The Effect of Education on Poverty

Everyone knows education as a keyway of gaining higher wages and escaping poverty. In this paper, I will be discussing the effect education has on poverty. I will specifically be looking at higher education, so the education variable is the percentage of people 25 years or older who have obtained a bachelor’s degree or higher. The poverty variable is the poverty rate in each state. The data that I am using is cross sectional data of the United States, collecting values from each state. Other explanatory variables that were used were cost of living index, unemployment rate, labor force participation rate, urban percentage of the population, and GDP per capita. Most of the data was collected from 2018 to 2020, except the urban percent of population variable which was collected in 2010. I first created a simple regression model estimating the ceteris paribus effect education has on poverty. I then went ahead and created other multiple regression models and used F-stats and t-stats to find the significance of my explanatory variables. Through this study, I was able to prove that there is a strong negative relationship between education and poverty