Wednesday, April 1, 2015

Increasing The Number Of US College Graduates Will Not Reduce Inequality

There is a positive relationship between obtaining a college degree and earnings potential.  Many believe that increasing the number of college graduates will lower the level of income inequality in the US.  This study did a simulation to determine whether a substantial increase in the number of college graduates would decrease the level of income inequality.  The simulation examined the impact of a 10% increase in the number of college graduates between the ages of 25 and 64 and found that this decreased the wage gap between those with and without college degrees and it reduced the level of inequality between those at the top of the bottom quartile and those in the middle quartile.  It did not, however, reduce the overall level of income inequality. There are a lot of benefits to individuals and to society that result from increasing the number of college graduates.  This even promotes improvement in secondary schools that must prepare more graduates for college.  Unfortunately, it is not the solution to our income inequality problem because it is primarily due to the gap between those at the very top of the distribution and everyone else.

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