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Higher education, elite institutions and inequality

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  • Bergh, Andreas
  • Fink, Günther

Abstract

We develop a model of higher education to analyze the effects of elite institutions on individual educational decisions and aggregate labor market outcomes. Elite institutions allow the most talented of a given population to separate themselves from the larger pool of agents enrolled in higher education, and to earn the associated wage premium in the labor market. As elite institutions engage in cream skimming, the returns to publicly accessible education decrease, and enrollment in public higher education declines. The resulting effect on income inequality is ambiguous, since elite education increases income dispersion at the top of the income distribution, and decreases income dispersion at the bottom.

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  • Bergh, Andreas & Fink, Günther, 2009. "Higher education, elite institutions and inequality," European Economic Review, Elsevier, vol. 53(3), pages 376-384, April.
    • Handle: RePEc:eee:eecrev:v:53:y:2009:i:3:p:376-384
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    References listed on IDEAS

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    2. Masashi Tanaka, 2013. "Human capital investment, Signaling, and Wage differentials," Discussion Papers in Economics and Business 13-31, Osaka University, Graduate School of Economics.
    3. Wei-Bin Zhang, 2018. "Public Knowledge, Individual Human Capital, and Private Wealth in a Generalized Dynamic Walrasian General Equilibrium Theory," Social-Economic Debates, Association for Entreprenorial Spirit Promotion, vol. 7(1), pages 74-99, April.
    4. Wei-Bin Zhang, 2016. "Impact of Education Subsidies and Taxation on Wealth and Human Capital Accumulation," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 2(3), pages 222-247.
    5. Annika C. Froehlich, 2016. "Does the curricular structure affect doctoral enrolment?," Journal of Business Economics, Springer, vol. 86(9), pages 1067-1089, December.
    6. Wei-Bin Zhang, 2015. "National Education and Global Economic Growth: A Synthesis of the Uzawa–Lucas Two-Sector and the Oniki–Uzawa Trade Models," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 6(4), pages 905-928, December.

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