The Role of Elite Institutions

The increase in the college premium­—the differential in what is earned by college graduates compared with what is earned by those with high-school diplomas—is a major factor contributing to rising inequality in America. A widely cited study by the economists Claudia Goldin and Lawrence F. Katz, The Race Between Education and Technology, reveals a sharp increase in the salaries of individuals with college diplomas and advanced degrees, because of the need for better-educated workers in our increasingly complex economy. According to Goldin and Katz, the college premium accounted for roughly 60 percent of the growth in wage inequality from 1973 to 2005. And the increasing demand for educated workers has led to tuition increases, especially since the 1980s.