Professor Zachary Bleemer has released a new working paper through NBER studying the decline of the “college-going premium” for students from lower-income families over the past century. Bleemer and his co-author, Sarah Quincy, Assistant Professor of Economics at Vanderbilt University, used dozens of survey and administrative datasets documenting 1900–2020 wage premiums and the composition and value-added of collegiate institutions and majors to identify three factors that explain this decline in wage benefit for lower-income college graduates.
The first factor that explains the falling value of college-going for lower-income students is the growing stratification in quality between research- and teaching-oriented universities. Bleemer and Quincy found that private and research-oriented public universities saw the largest value-added gains between the 1960s and the 1990s. These institutions have also improved across other quality measures such as student-to-faculty ratios, revenues and expenditures per student, and graduation rates.
“Those institutions also disproportionately enroll higher-income students. The teaching-oriented public universities where lower-income students tend to enroll had similar 1960s measures of quality to research-oriented public universities, but those measures of quality have steadily deteriorated,” they write.
Another factor the authors identify is lower-income students’ diversion to community and for-profit colleges. By observing where lower- and higher-income students have attended since the 1930s, they note that “while lower-income students enrolling at traditional four-year institutions have benefited from broadening access to high-quality universities since the 1980s,” these gains have been diminished by the students’ increasing diversion from teaching-oriented public universities into community colleges and for-profit colleges.
Finally, higher-income students’ net exodus out of the humanities and into computer science and other engineering fields has significantly contributed to the shrinking college-going premium. The authors find that while “the dispersion between majors’ wage premiums has increased, their ranking has remained strikingly stable: e.g. engineering and business majors consistently offer far higher returns than humanities and agriculture.” Additionally, “lower-income students earned much lower-value majors than their higher-income peers in only two periods: the mid-20th century and since 2000.” Bleemer and Quincy point to two recent trends in college majors, driven by high-income students, which have contributed to the most recent divide: the ‘death’ of humanities enrollment and rising computer science enrollment.
The authors’ findings “link the long literature on the relationship between education, inequality, and economic mobility with the more recent microeconomic literature documenting heterogeneity in the college wage premium.”
Read their full paper for all of the data and findings. For a review of the paper, read The Chronicle‘s recent article.
Zachary Bleemer is an Assistant Professor of Economics at Princeton University in the Industrial Relations Section and a faculty research fellow at the National Bureau of Economic Research. He is also a research associate of Opportunity Insights and the Center for Studies in Higher Education. Bleemer is a labor economist who studies American higher education.