Does College Education Reduce Income Inequality?

by Daniel Bennett

I came across some interesting data today that seems to support a theory that CCAP has been exploring that college education actually increases income inequality, as opposed to the popular notion that it decreases it. The chart to the right displays the percentage of the 25+ population that earned above the indicated income levels in 2007 and the gini ratio by educational attainment. According to the Current Population Survey's 2008 Annual Social and Economic Supplement, individual income inequality, as measured by the gini coefficient*, is highest among adults age 25+ without a high school diploma (9th-12th grade attainment), followed closely by those holding a bachelor's degree.

While the data does suggest that attaining higher levels of education improves one's chances of earning greater income, the relatively unequal distribution of income among those with a bachelor's degree is startling and should be a cause for concern. We need to investigate the adage that college education is the antidote to income inequality. The more that I investigate this relationship, the more that I am led to believe that increasing the proportion of the population with a college education is increasing the disparity in income between the haves and the have-nots (college degrees in this case). Preliminary analysis from ongoing research suggest that there is a positive association between educational attainment and income inequality, indicating that as the average educational attainment goes up, so does income inequality. More on this to come later.

*The income gini coefficient is a statistical measure of the inequality of the distribution of income. It is a ratio between 0 and 1, with a lower value representing more equality in the distribution of income, and a higher value representing more inequality in the distribution of income.