Where’s The Skill Upgrades

Joseph G. Antolji, Prashant Bharadwaj, and Fabian Lange take a look at one of the most pressing questions we face — given the growing rewards to educational attainment, how come Americans have shown so little proclivity to respond to these incentives by expanding the proportion of educated people? In other words, skill-biased technological change should be leading to an increase in the proportion of people who graduate from college. Instead, it’s leading to an increasing wage gap between graduates and non-graduates as the proportion stays flat.

One leading possible explanation is that “Research summarized in Cunha and Heckman (2007) suggests that part of the explanation might be that parental investment during early childhood shapes the potential to acquire additional skills later in life.” As Sara Mead says the likeliest cure is to “improve early childhood and elementary school education, and also improve education and support for parents, so that they understand the economic realities facing their children and have the resouces and skills to support their children’s learning in early childhood and beyond.”

I think that in recent years a lot of liberals have kind of wandered down a dead end of insisting that we should ignore the educational component to growing inequality. The way this went was that first liberals started complaining about growing inequality. Then conservatives started gesturing vaguely at skill-biased technological change as the culprit and saying there’s nothing to be done. So in response progressives have shown that a substantial portion of growing inequality (specifically the inequality at the very top, the takeoff of the top 1, top 0.1, and top 0.01 percents) doesn’t seem to be something we can explain in these terms. Which is true.

But then again the education picture does explain a substantial amount. And educational attainment isn’t a fixed metaphysical element of the universe, better policies would get a better-educated population. One reason why Europe hasn’t seen as much growth in inequality is that in western European countries the proportion of people finishing college has kept climbing steadily. It used to be the case that more Americans than Europeans went to college, and most Americans still have a mental image of that being the case, but it’s generally not true any more and it’s helped Europe maintain a relatively equitable distribution of income as well as laying the groundwork for a generally high standard of living.