New study: The relative wage premium for going to college has halved for low-income Americans since 1960. What is to blame? Rising selectivity? Tuition hikes? State disinvestment? We decompose changes in the premium since 1900 to find out. 🧵#EconTwitter

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RT @lydiadepillis: From the NBERs in the last few weeks, a study that I think explains a lot about this political moment: Higher education….

RT @nberpubs: The wage premium has halved for lower-income collegegoers since 1960 due to disinvestment from teaching colleges, diversion t….

If you have questions about, e.g.:. 1. Things it's not: selection into college/the Ivy League/selectivity and the SAT/rising tuition;.2. Causal interpretability;.3. What about women;.4. Details on data construction;. or more, you should definitely take a look at the full study!.

Thanks for reading! You can find an ungated version of the study here:.

If lower-income kids still got the same relative value from going to college as in 1960 – even holding fixed *who* goes to college – then intergenerational income transmission in the US would fall ~25%. This explains most of the decline in economic mobility since the '60s.

Altogether, changes in institutional returns (30%), major composition (25%), and two-year and for-profit composition (20%) explain most of the regressivity trend. This is why going to college has become less valuable for poor students.

The for-profit sector peaked in the 2000s and has dramatically shrunk. But recent growth of the community colleges disproportionately holds poor students back. Poor students' diversion to these lower-value colleges explains about 20% of the rise in collegiate regressivity.

Trend 3️⃣ explaining the rise of collegiate regressivity is the growth of community colleges and the for-profit sector. Students who attend these schools derive lower value-added from them. Since the 1980s, those students have been disproportionately poor.

Today, 10% of male college graduates earn CS degrees. It's doubled in 10 years. Most of that growth was driven by rich students, making college more regressive. Why? As I've shown before, universities exclude poor students from CS using restrictions:.

We all know that the humanities are shrinking. It turns out that most of that decline is coming from rich students. Possibly for the first time ever, poor students are now more likely to be humanities majors than rich students. That's bad for economic mobility.

Sometimes, like in the 1920s or the 1990s, poor and rich college students earn similar-value majors. Today, though, poor students earn much lower-paying majors than the rich. This explains 25% of regressivity. Two disciplines are most at fault: humanities and computer science.

Trend 2️⃣ driving collegiate regressivity is the most surprising. This one is about college majors. There are huge differences in wage value across majors. They haven't changed much over time. Humanities at the bottom. Engineering at the top. The gap has widened.

If colleges' value-added hadn't changed since 1960, rich and poor students would have always attended similar-value schools. But using current value-added, poor students attend lower-value uni's. Teaching-oriented publics' deterioration explains 30% of collegiate regressivity.

College quality varies widely: e.g. research-oriented publics have 2x the per-student revenue of teaching-oriented publics. That money buys value. We measure colleges' "value-added": the degree to which they increase future wages. Poor students' colleges' value has fallen.

Number 1️⃣ is about changes in colleges' quality. Rich students have always mostly attended private and research public universities. Poor students mostly go to teaching-oriented publics. That's still true. But the teaching-oriented publics have deteriorated in value.

We first plot the slope of the college-going premium by parental income over time. Positive numbers mean the premium is regressive. Between 1920 and 1960, the premium was equal for the rich and poor. It's been getting more regressive since then. Three factors explain the trend:

To identify and trace the causes of rising collegiate regressivity, we combine dozens of nationally-representative survey and admin datasets spanning 1900-2023. The data include the parental income, college, major, and early-30s wages of hundreds of thousands of Americans.

In the early 1900s, the wage premium for going to college was the same for sons from both rich and poor families : +10 ranks (+15%) in the wage distribution. Today, the wage premium has grown for the rich but sharply fallen for the poor. We call this "collegiate regressivity".