My Two Cents

Education and income inequality

Chris Farrell Mar 6, 2009

Economist Bryan Caplan at the Econolog blog highlights a new paper by Theda Skocpol of Harvard University and Suzanne Mettler at Cornell. It’s a worthwhile paper in how higher education is exacerbating income inequality in the U.S.

In 1970, 6.2 percent of the U.S. population in the bottom income quartile had completed a baccalaureate degree by age 24-and that percentage actually declined slightly, to 6 percent, by the year 2000. Lower-middle-income young people from the second (to the bottom) income quartile improved their college completion rates only slightly from 1970 to 2000, from 10.9 percent to 12.7 percent. But note the contrasting trajectories for young people in the upper half of the income distribution. For those in the third quartile-solidly middle-class families-completion percentages rose markedly, from 14.9 percent in 1970 to 26.8 percent in 2000. And for the most privileged young people, those from upper-middle-class and upper-class families in the top quarter of the income distribution, college completion rates rose from 40.2 percent in 1970 to 51.3 percent in 2000. Compared to the mid-twentieth century, higher education is now increasingly exacerbating socioeconomic inequality in the United States.

The high and rising cost of education coupled with declining government support for low income families–until recently–isn’t good policy in a knowledge-intensive economy.

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