American income inequality is one of those issues that seems to come up every year around election season. Every candidate and party has their own ideas and solutions to the problem, but everyone seems to agree that strengthening our education system and getting more people through college will help fix the problem of income inequality. It makes sense, doesn’t it? If more disadvantaged people had the opportunity to go to get an education and graduate from college, they’d get a higher paying job and start to close the gap. However, a New York Times article summarizing recent research findings begs to differ.
The article summarizes a paper written by researchers at the Hamilton Project (which is a politically moderate economic research group). The paper argues that although more education would help the middle and lower class find greater economic success, it wouldn’t be able to change the greater system of inequality in America. The researchers reached this conclusion by running a simulation that assumed 10 percent of non-college educated men in America suddenly received a college diploma and the pay raise that usually comes with it (I was curious why the simulation only gave college degrees to men. I looked at the actual paper, and found they explained that they used only men because low-income men have the largest drops in employment and earnings, and the lowest college graduation likelihood). After granting the college diplomas in the simulated world, the average lower to middle class income increased by 9 percent.
Then things get a little complicated. I don’t know much about economics so it was hard for me to interpret the results. Basically although more education increased the income of low or middle income men in the simulation, the income of those in the top ten percent of the income bracket also enjoyed higher incomes due to inflation. The Gini ratio, which is a measure of economic inequality, went from .57 in the actual 2013 data to .55 in the simulated data. That means higher education attainment actually slightly widened the inequality gap. The article ends by arguing that a stronger education system and more college graduates would help those in the middle and lower class by raising their average income. However, improving education won’t close the income gap and fix systemic inequality.
I thought this study was interesting, but I worried about how it might be interpreted. Although increasing education levels in the middle and lower classes might not fix our broken system, it could have a great impact on the lives of the individuals who increase their education. Attaining higher education can provide an economic boost that could easily change a family’s life for the better. Besides that I like to think that there is value beyond economic gains in a college education– like learning to interact with the world on a deeper level, and making connections with mentors and peers. The economic gains due to higher education attainment may not have change the inequality gap on their own. But I wonder if the motivation, self worth, and social capital lower income individuals could gain through higher education could change things. Now that would be an interesting simulation.