Educational opportunity and income inequality
By: Paul Willen, Igal Hendel, Joel Shapiro.
Contributors: Hendel, Igal.; Shapiro, Joel David, 1973-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10879; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10879.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Wages -- Effect of education on -- United States.; Wages -- United States -- Regional disparities.; Education and state -- United States.; Government aid to higher education -- United States.
Description: "Affordable higher education is, and has been, a key element of social policy in the United States with broad bipartisan support.  Financial aid has substantially increased the number of people who complete university - generally thought to be a good thing.  We show, however, that making education more affordable can increase income inequality.  The mechanism that drives our results is a combination of credit constraints and the 'signaling' role of education first explored by Spence (1973).  When borrowing for education is difficult, lack of a college education could mean that one is either of low ability or of high ability but with low financial resources.  When government programs make borrowing or lower tuition more affordable, high-ability persons become educated and leave the uneducated pool, driving down the wage for unskilled workers and raising the skill premium"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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Mode of access: World Wide Web.