Wednesday, February 27, 2008
I was lecturing about inequality in my development economics class yesterday. But it is also worth thinking about changes in inequality in the United States. Over at Dani Rodrik’s blog he uses data from Frank Levy to create the graph that goes along with this post.
What does the graph tell us? If you do not have a high school degree you earn less in real terms then you did 25 years ago (high school wages are the blue line). If you have a college degree you earn about 20% (pink line) more and 50% more if you have a graduate degree (green line) than 25 years ago. This also shows the gap between college educated and non-college educated is growing.
Given this data what would be good policy responses for those with no college degree? Getting more people to go to college would seem to be a good policy solution. This is happening as college attendance is increasing: 30% of adults aged 25-39 had completed college in 2007 compared to 22% in 1980.
Still this means that 70% of the country that did not go to college* has not seen an increase in wages from the economic growth of the last 25 years.
* See my father's note in the comments, Rodrik does not include some college, so my 70% figure is not quite right.