In a recent blog post, Greg Mankiw posits that education is the key to closing the income gap, allowing upward mobility for any regular 99%er to join the elite 1%. According to Mankiw, working hard in school improves the odds that an individual is able to join the 1% or at least significantly increase their earnings potential. Education then closes the income gap and smoothes out inequality.
But the question arises: if college enrollment has been steadily increasing over the years, why do we still have the highest income inequality in decades?
Let’s give a closer look at Mankiw’s claim about the great equalizer that is college. In this claim, he fails to acknowledge that access to education is often determined by the income of a potential college freshman’s family. Simply put, Mankiw fails to acknowledge that barriers to access exist.
A 2007 report by UCLA on entering freshman found that the median income of the families of was 60% higher than the national average in 2005. Further, at institutions that may appear to increase the probability of joining the upper-crust 1%, namely Ivy League institutions such as Princeton, Harvard, and Yale, evidence shows the acceptance of people with incomes in the bottom 50th percentile is exceptionally low around 10-12%. A recent Georgetown study reported on by the New York Times that within the 2010 freshman class, drawing from “193 of the country’s most selective colleges”, only 15% of the freshman class came from the bottom 50% of the income distribution and 67% came from the top 25% of the income distribution.
With those reports in mind, it becomes quite clear that for Mankiw’s claim is unsubstantiated. The idea that higher education is a means towards great income equality is solely dependent on having no barriers to access for all levels of income and socio-economic groups. Unfortunately, that is simply not the case. Unless the American educational system is drastically restructured to provide adequate college preparation across all income levels and proportionally accept students from the bottom percentiles it is likely that the distribution of higher education and wealth with remain significantly skewed in favor of the 1% and the already wealthy.