Inequality and education

10 June, 2017 at 13:24 | Posted in Economics | 3 Comments

Harvard economist and George Bush advisor Greg Mankiw is one of many mainstream economists who has been appealing to the education variable to explain the rising inequality we have seen for the last 30 years in both the US and elsewhere in Western societies. Writes Mankiw:

mike1july1Even if the income gains are in the top 1 percent, why does that imply that the right story is not about education?…

If indeed a year of schooling guaranteed you precisely a 10 percent increase in earnings, then there is no way increasing education by a few years could move you from the middle class to the top 1 percent.

But it may be better to think of the return to education as stochastic. Education not only increases the average income a person will earn, but it also changes the entire distribution of possible life outcomes. It does not guarantee that a person will end up in the top 1 percent, but it increases the likelihood. I have not seen any data on this, but I am willing to bet that the top 1 percent are more educated than the average American; while their education did not ensure their economic success, it played a role.

To me this is nothing but really one big evasive attempt at trying to explain away a very disturbing structural shift that has taken place in our societies. And change that has very little to do with stochastic returns to education. Those were in place also 30 or 40 years ago. At that time they meant that a CEO earned 10-12 times what “ordinary” people earns. Today it means that they earn 100-200 times  what “ordinary” people earns.

A question of education? No way! It is a question of  income and wealth increasingly being concentrated in the hands of a small privileged elite, greed and a lost sense of a common project of building a society for everyone and not only for the chosen few.



  1. Why is it that equality is always being discussed on these forums when in fact it is equality of opportunity which is truly the economic pivot? Good education will follow naturally if and when we all have an equal chance.

    • Tautological? We need to think about whether inequality means we dont all have an equal chance period!

  2. To have equality of opportunity, you have to be aware of the opportunity.

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