Recent Flattening in the Higher Education Wage Premium: Polarization, Skill Downgrading, or Both?

47 Pages Posted: 19 Sep 2016

See all articles by Robert G. Valletta

Robert G. Valletta

Federal Reserve Bank of San Francisco; IZA Institute of Labor Economics

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Abstract

Wage gaps between workers with a college or graduate degree and those with only a high school degree rose rapidly in the United States during the 1980s. Since then, the rate of growth in these wage gaps has progressively slowed, and though the gaps remain large, they were essentially unchanged between 2010 and 2015. I assess this flattening over time in higher education wage premiums with reference to two related explanations for changing U.S. employment patterns: (i) a shift away from middle-skilled occupations driven largely by technological change ("polarization"); and (ii) a general weakening in the demand for advanced cognitive skills ("skill downgrading"). Analyses of wage and employment data from the U.S. Current Population Survey suggest that both factors have contributed to the flattening of higher education wage premiums.

Keywords: higher education, wages, skills

JEL Classification: J31, J24, I23

Suggested Citation

Valletta, Robert G., Recent Flattening in the Higher Education Wage Premium: Polarization, Skill Downgrading, or Both?. IZA Discussion Paper No. 10194. Available at SSRN: https://ssrn.com/abstract=2840138

Robert G. Valletta (Contact Author)

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