IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v112y2022i1p81-121.html

College Tuition and Income Inequality

Author

Listed:
  • Zhifeng Cai
  • Jonathan Heathcote

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.

Suggested Citation

  • Zhifeng Cai & Jonathan Heathcote, 2022. "College Tuition and Income Inequality," American Economic Review, American Economic Association, vol. 112(1), pages 81-121, January.
    • Handle: RePEc:aea:aecrev:v:112:y:2022:i:1:p:81-121
    DOI: 10.1257/aer.20181027
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/aer.20181027
    Download Restriction: no
    File URL: https://doi.org/10.3886/E151521V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/aer.20181027.appx
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/aer.20181027.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://libkey.io/10.1257/aer.20181027?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lutz Hendricks & Christopher Herrington & Todd Schoellman, 2018. "College Access and Attendance Patterns: A Long-Run View," Opportunity and Inclusive Growth Institute Working Papers 10, Federal Reserve Bank of Minneapolis.
    2. Tyrrell-Hendry, Lee, 2024. "Should I Stay (in School) or Should I Go (to Work)," Journal of Public Economics, Elsevier, vol. 239(C).
    3. Lukas Riedel & Holger Stichnoth, 2024. "Government consumption in the DINA framework: allocation methods and consequences for post-tax income inequality," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(3), pages 736-779, June.
    4. Lutz Hendricks & Christopher Herrington & Todd Schoellman, 2016. "The Changing Roles of Family Income and Academic Ability for US College Attendance," Working Papers 1602, VCU School of Business, Department of Economics, revised Apr 2017.
    5. Mellior, Gustavo, 2025. "Higher education funding, welfare and inequality in equilibrium," Journal of Comparative Economics, Elsevier, vol. 53(4), pages 1133-1172.
    6. Behringer, Jan & Gonzalez Granda, Martin & van Treeck, Till, 2022. "Varieties of the rat race: Working hours in the age of abundance," ifso working paper series 17, University of Duisburg-Essen, Institute for Socioeconomics (ifso).
    7. Yang, Guanyi & Casner, Ben, 2021. "How much does schooling disutility matter?," Research in Economics, Elsevier, vol. 75(1), pages 87-95.
    8. Oz Shy, 2021. "College Education, Earning Inequality, and Market Power," Journal of Labor Research, Springer, vol. 42(3), pages 334-357, December.
    9. Sagiri Kitao & Kanato Nakakuni, 2023. "On the Trends of Technology, Family Formation, and Women's Time Allocation," CAMA Working Papers 2023-54, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:112:y:2022:i:1:p:81-121. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.