Is greater access to college education the solution to income inequality?
First, let’s get one matter out of the way: If you happen to be a graduating high school senior, go to college if you can. As David Leonhardt explains in The New York Times, “Yes, college is worth it.” The “college premium” — the average income difference between those who have a college degree and those who do not — has never been larger.
But it’s stopped growing.
Before we proceed, a bit of background. The rise in income inequality since 1979 isn’t one divergence but two. One of these is a growing disparity between the top 1% of the income distribution and the bottom 99%. The other is a growing disparity between those who possess a college or graduate degree and those who do not.
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Lately, the 1% type of inequality has been getting most of the attention — including in Thomas Piketty’s new book, “Capital in the Twenty-First Century.” That’s because in recent years the 1% type has been increasing more dramatically. It’s also much easier to identify the causes of the rapid growth in the income share for the 1% (really, the top 0.1%): deregulation on Wall Street and an out-of-control upward spiral in pay packages for top executives. To the extent that any discussion of inequality finds fault with the winners, criticizing the top 1% of the population is always going to be more popular than criticizing the top 10% or 20%.
Some commentators, Piketty included, suggest that the income disparity between people with postsecondary degrees and those who lack them is unimportant. Since 1970, the “overperformance” of the top 1%, Piketty writes,” “explains most (nearly three-quarters) of the increase” in the top 10%’s rising share of U.S. national income. Piketty concedes that investment in education and skills is the best way to reduce inequality over the long term, but he also writes, “there is no evidence that education has really increased intergenerational mobility.”
But to judge from the college premium, educational attainment matters quite a lot — to inequality, and likely to mobility as well.
Yes, the college premium has stopped growing. But before it stopped it grew quite a lot starting in the early 1980s. The magnitude of that growth, MIT economist David Autor writes in the May issue of Science, was “four times as large as the redistribution that has notionally occurred from the bottom 99% to the top 1% of households.” A similar skills-based wage gap opened up in many comparable nations, but nowhere to the same extent as in the U.S., where average earnings for college graduates rose, according to Autor, from 1.5 times those of high school graduates in 1982 to twice those of high school graduates in 2005.
Exactly when the college premium stopped increasing is a matter of some dispute. But the growth appears to have halted at least nine years ago. Autor says it stopped in 2005 because between 2004 and 2012 “the supply of new college graduates to the U.S. labor market rose at a rate not seen in several decades.”









