The College Wealth Divide: Education and Inequality in America, 1956-2016

35 Pages Posted: 2 Aug 2019

See all articles by Alina K. Bartscher

Alina K. Bartscher

University of Bonn

Moritz Kuhn

University of Bonn

Moritz Schularick

University of Bonn - Department of Economics; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: July 2019

Abstract

Using new long-run micro data, this paper studies wealth and income trends of college and non-college households in the United States since 1956. We document the emergence of a substantial college wealth premium since the 1980s, which is considerably larger than the college income premium. Over the past four decades, the wealth of American households with a college-educated head has tripled. By contrast, the wealth of non-college households has barely grown in real terms over the same period. Part of the rising wealth gap can be traced back to systematic portfolio differences between college and non-college households that give rise to different exposures to asset price changes. Non-college households have a lower exposure to the equity market and have profited much less from the recent surge in the stock market. We also discuss the importance of financial literacy and business ownership for the increase in wealth inequality between college and non-college households.

Keywords: college wealth premium, education, inequality, Wealth

JEL Classification: D31, E21, I24

Suggested Citation

Bartscher, Alina K. and Kuhn, Moritz and Schularick, Moritz, The College Wealth Divide: Education and Inequality in America, 1956-2016 (July 2019). CEPR Discussion Paper No. DP13864. Available at SSRN: https://ssrn.com/abstract=3428388

Alina K. Bartscher (Contact Author)

University of Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

Moritz Kuhn

University of Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

Moritz Schularick

University of Bonn - Department of Economics ( email )

Bonn
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
2
Abstract Views
434
PlumX Metrics