Explaining Rising Income and Wage Inequality Among the College Educated
82 Pages Posted: 10 May 1999 Last revised: 14 Oct 2022
Date Written: January 1999
Abstract
The incomes and wages of college-educated Americans have become significantly more dispersed since 1970. This paper attempts to decompose this growing dispersion into three possible sources of growth. The first source, or extensive margin,' is the increasing demographic diversity of people who attend college. The second is an increasing return to aptitude. The third, or intensive margin,' combines the increasing self-segregation (on the basis of aptitude) of students among colleges and the increasing correlation between the average aptitude of a college's student body and its expenditure on education inputs. These tendencies are the result of changes in the market structure of college education, as documented elsewhere. We find that about 70% of the growth in inequality among recipients of baccalaureate degrees can be explained with observable demographics, measures of aptitude, and college attributes. About 50% of the growth in inequality among people who have 2 years of college education can be similarly explained. Of the growth that can be explained, about 1/4th is associated with the extensive margin, 1/3rd with an increased return to measured aptitude, and 5/12ths with the intensive margin. If the intensive margin is not taken into account, the role of increasing returns to aptitude is greatly overstated.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Stacy Berg Dale and Alan B. Krueger
-
By Dominic J. Brewer, Eric Eide, ...
-
The Effects on Income of Type of College Attended
By Lewis C. Solmon and Paul Wachtel
-
Monetary Returns to College Education, Student Ability, and College Quality
By Burton A. Weisbrod and Peter Karpoff
-
The University in the Marketplace: Some Insights and Some Puzzles
-
Playing the Admissions Game: Student Reactions to Increasing College Competition
By John Bound, Brad Hershbein, ...
-
Escaping Mass Education - Why Harvard Pays
By Andreas Bergh and Guenther Fink