We hear it all the time: higher education is the best solution for economic inequality.
Well, as it turns out, not so much—at least according to a relatively simple and straightforward simulation exercise conducted by
Imagine a situation in which ten percent of non-college educated men aged 25 to 64 were to immediately obtain a bachelor’s or advanced degree. (As the authors explain, “this would be a tremendous accomplishment. It is only slightly less than the observed increase in the college share over the entire 34-year period of 1979 to 2013.”)
Here’s what they found:
1. Increasing the educational attainment of men without a college degree will in fact increase their average earnings and their likelihood of being employed (but it still wouldn’t make up for what they’ve lost, at the 50th percentile and below, since 1979).
2. Increasing educational attainment will not significantly change overall earnings inequality (as measured by the Gini and Theil indices). (The reason is that a large share of earnings inequality is at the top of the earnings distribution, and changing college shares will not shrink those differences.)
3. Increasing educational attainment will, however, reduce inequality in the bottom half of the earnings distribution, largely by pulling up the earnings of those near the 25th percentile (but that still doesn’t improve overall inequality)
Hershbein, Kearney, and Summers are in favor of increasing the level (and, I would add, the quality) of education of workers at the bottom of the distribution of income. Who wouldn’t be?
But, they warn,
additional and separate measures will be needed to address rising levels of overall inequality, which, as we have shown, is mostly driven by changes at the top of the distribution.
The lesson: we’re not going to solve the problem of growing inequality unless and until we go beyond the suggestion of more education and begin to imagine and create radically different—more democratic and equal—economic institutions.