While it may sound impressive to boast about having a highly ranked state university, it is not a necessary factor for strong economic growth in a state. Their statistical analysis revealed no correlation between state per-capita spending on higher education and state economic growth. These findings are backed up by work from other economists. The key contribution of colleges and universities in terms of economic growth is the production of educated and skilled individuals. However, there is no reason to believe that such individuals will wind up living and working in the same area they were educated.
Workers can and do move to where they find the best jobs.
Where a person studied medicine, law, accounting, engineering, computer science, etc. is rarely of any consequence to employers. State borders now have almost no economic significance, whether we are talking about the market for educated workers or the market for coffee mugs. That means low taxes, less regulation, and smaller government. Right, and Wrong With America State by State.