The Higher Education Elevator

Catherine Rampell points to a new Treasury Department report on the economic impact of higher education. She (among other things) highlights the effects on intergenerational mobility in the top quintile:

Look at the fifth (and highest) parents’ income quintile. The children of this group who didn’t go to college are just barely more likely to stay at the top than they are to end up in each of the other income groups. That’s basically what you would expect if your economic fate were not influenced at all by your parents’: that you’d have an equally likely chance of ending up anywhere in the income distribution when you grow up.

And the accompanying graph:

The near equality in outcomes for the top without a college degree is interesting, but of course this is lacking some relevant context – such as the percentage of those that are without a college degree. Without spending a great deal of time looking it up I’d hazard a guess that it’s small. For those of us focused on outcomes it’s the stickiness of the bottom quintile that’s worrisome:

Without a degree, children born to parents in the bottom income quintile have a 45 percent chance of remaining there as adults. With a degree, they have less than a 20 percent chance of staying in the bottom quintile of the income distribution. 

Thus, the macro-impact of higher education on here is to greatly increase upward mobility. The 45 percent stickiness has been mentioned before, most notably by Scott Winship, as the “real” problem with increasing inequality. You’d think given the success in aggregate outcomes that is associated with college degrees such higher education would be considered an important public investment. Which makes the following graph, although hardly new information, so disappointing:

While State and local funding for college has declined, federal funding has been increasing -now accounting for 55 percent of all financial aid to undergraduate students:

  • Public institutions have become more reliant on tuition as a revenue source. Recently, over 40 percent of public institutions’ revenue has come from tuition, including Federal financial aid, up from just 20 percent in 1987.

I don’t really want to get into anything more comprehensive than what’s here. Suffice it to say that if you care about increasing upward mobility for those born into the bottom of the socioeconomic order then you should care about supporting the conditions in which those increases occur – and higher education is a big part of that environment.


One response to “The Higher Education Elevator

  1. Pingback: Some notes on how we spend our money | Punditocracy·

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