Investing in North Dakota’s Future Economy Through State Funded College Scholarships: A Return-on-Investment Analysis

By Xudong Rao, Dean Bangsund, William Nganje, John Bitzan

North Dakota was experiencing persistent labor shortages prior to the Covid-19 pandemic, and the situation has worsened since the onset of the pandemic amidst a tightening national labor market. The state has launched recruiting efforts nationwide to attract out-of-state workers to fill job openings within the state, yet the effectiveness of these efforts and the contributions of these workers to the state’s long-run economic growth remain largely uncertain.

In addition to recruiting workers from elsewhere, the state has invested in human capital acquisition through its universities and colleges. During the 63rd legislative assembly, the state launched the North Dakota Higher Education Challenge Grant Program. The program operates as a matching fund, where one dollar is provided as a match “for every two dollars of nonstate, non-federal dollars raised by the institutional foundations of North Dakota public colleges and universities for funds dedicated to the advancement of academics” (NDUS). Since its inception, 62 percent of funds have been allocated to scholarships. This report provides an estimate of the return on investment the state can expect to realize from this program using Modified Internal Rate of Return (MIRR), a well-documented methodology utilized in previous academic studies.

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