American Economic Review Vol. 112 No. 1 2022
College Tuition and Income Inequality
open access
Abstract
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.
- DOI
- 10.1257/aer.20181027
- Volume
- 112
- Issue
- 1
- Pages
- 81-121
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref