College Tuition and Income Inequality

• 成果类型: Article
• 署名作者: Cai, Zhifeng; Heathcote, Jonathan
• 署名单位: Rutgers University System; Rutgers University New Brunswick; Federal Reserve System - USA; Federal Reserve Bank - Minneapolis
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20181027
• 发表日期: 2022
• 页码: 81-121
• 关键词: peer; earnings; vouchers; PRIVATE; schools; matter; state; price

摘要

This paper evaluates the role of rising income inequality in explaining observed growth in college tuition. We develop a competitive model of the college market, in which college quality depends on instructional expenditure and the average ability of admitted students. An innovative feature of our model is that it allows for a continuous distribution of college quality. We find that observed increases in US income inequality can explain more than half of the observed rise in average net tuition since 1990 and that rising income inequality has also depressed college attendance.