Was higher education ever likely to reduce inequality?

Next week I am a panelist in a discussion on whether Australia has an equitable tertiary education system. The promotional blurb says:

Australians believe we live in a fair and egalitarian country. We believe in a fair go: in equality of opportunity. We also believe that accessible education and training is a fundamental right and it facilitates prosperity, social mobility and a richer and more engaged economy.

Are these beliefs about who we are based in fact? While access to higher education has increased dramatically over the past 30 years, income and wealth inequality is also on the rise. This seeming contradiction challenges our most fundamental beliefs about intergenerational mobility. Is the education system a cure or a curse? …

When I accepted the invitation to be on the panel I told the organisers that I did not know the answers to their questions, but I could offer some observations. I am going to try a few of them out on this blog.

Starting theoretically, I think social mobility and income inequality are distinct issues. It was always more plausible that education would promote mobility in personal status than that it would reduce snapshot-in-time income inequality figures. Indeed, there are reasons for thinking that higher education is more likely to increase than decrease income inequality.

Higher education can increase individual income inequality by facilitating a more unequal labour market. Higher education provides the training to support an increasing number of highly-skilled and highly-paid professionals. In a 2017 paper, Jeff Borland and Michael Coelli have some interesting charts showing growth in demand for the kinds of cognitive skills that a university education aspires to teach. Consistent with this, numerous papers have shown substantial financial ‘returns’ to higher education. This Deloitte report from last year summarises some of the local literature and adds its own estimates.

Individual income inequality translates into even greater household income inequality via graduates partnering with each other. I haven’t found any recent Australian statistics on this subject, but it is hard to think of any reason why this would not be a factor here.

Aside from the purely financial implications of getting a degree, higher education creates its own status system that converts intelligence and academic effort into prestige. We have created an official hierarchy of qualifications, with degrees at the top. Universities are ranked by age, ATAR, and research; the three tend to be linked and reinforce each other. A less formal hierarchy of disciplines also converts ATAR into prestige; it is more impressive to study medicine than nursing or law than arts.

Higher education also increases occupational prestige; as with qualifications this is reflected in the way jobs are classified. It makes professions harder to get into and more exclusive. Over the twentieth century, many jobs that were once open to people without a university education came to require a bachelor degree. Now some professions want a masters degree.

At least in theory, there was more potential for higher education to promote social mobility than equality of outcomes. The cognitive and personality attributes that higher education can convert into money and prestige are found across the socioeconomic spectrum. Similarly, a lack of these attributes is found across the socioeconomic spectrum.

At least in principle, it is possible to create educational institutions that will push smart and hard-working people from lower-class backgrounds up the socioeconomic spectrum, and make it harder for dumb and lazy people from upper-class backgrounds to maintain their social position. So while there will still be a lot of inequality in society at any given point in time, it will be fluid over longer periods of time, with people moving up and down between generations.

In theory, too, other trends in society could help promote social mobility. Merit-based entry to universities, occupations and firms reduced the power of existing family and class networks to put their children and friends into high positions, regardless of whether they were the best person for the role, or were even competent.

Education-driven social mobility does occur in every Western society. But this meritocracy has long had powerful critics, beginning 60 years ago with Michael Young’s famous book on the topic.

One of meritocracy’s problems, from an equality perspective, is that even though the attributes needed for educational success are found across the socioeconomic spectrum, they are skewed towards its upper end. Families with high levels of education are very good at passing the attributes for success on to the next generation. The danger is that meritocracy will end up being nearly as hereditary as aristocracy. Meritocracy’s critics argue that it can be even worse than aristocracy, because meritocrats believe that they truly deserve their position in a way that aristocrats do not. They hold the positions they do based on ‘merit’, as defined by qualifications and marks, and not directly on their family connections.

Mass higher education also creates the problem of ‘credentialism’, of employers preferring or requiring degrees for jobs that don’t need the skills taught at university. This blocks social mobility paths for people who lack credentials but could have learned on the job.

Overall, then, higher education can easily increase and entrench inequality on various dimensions. That inequality hasn’t gone down in the mass higher education era is not surprising. In subsequent posts I will not assess Australian higher education against a standard that was never likely to be realistic. Rather, I will assess its outcomes in the context of the substantial inequality risks inherent in higher education.

  1. The argument you put forward works at an absolute level, since it is not possible to entirely remove social inequities. As the margins narrow, those with more capital and/or advantages will continue to exploit them. But at a relative, or comparative level, clearly HE helps redress inequality and the Australian HE system today is more equitable than ever before. I therefore challenge your proposition that inequality hasn’t gone down in the mass higher education era. I believe there are plenty of data to show the reverse.

    I wonder also whether it is HE that is causing the problem of credentialism, or the market? According to HESA, the purpose of HE is threefold, encompassing nine core aims, only one of which infers that there might need to be a cap on graduates (i.e. “is appropriate to meet Australia’s social and economic needs for a highly educated and skilled population…”). The remaining aims relate to knowledge, research, social inclusion, equality of opportunity and nation-building, none of which require supply to be capped – rather the opposite. Rather than restrict graduates to address credentialism, better the market reassesses criteria for employability.

    I realise towards the end there I may have been straying from your central thesis and putting words into your mouth.

  2. Good luck with your panel discussion, it looks interesting.

    I think it is factually correct that education and training “facilitates prosperity, social mobility and a richer and more engaged economy.” Some of the identified problems are simply correlated with HE massification, not caused by it (e.g. intergenerational inequality of wealth or within generation inequality derived from the decline in blue collar jobs, unions, etc.). It is hard to imagine an argument that an elite HE system would have achieved better outcomes for social mobility.

    IMO, the problems of income and wealth inequality lie primarily outside the higher education sector. If we are concerned by too few low SES students accessing selective universities or courses, then this is best addressed by providing equality of quality in primary/secondary schools. If we want more equality of financial outcomes, then progressive income (from all sources), wealth and inheritance taxation are a better approach. We know the Nordic countries have both of these things in place, but we also know Australia is not Denmark.

  3. No Marxist nor neo Marxist such as Michael Apple or Pierre Bourdieu would ever believe that education, nor any other part of the super structure, would ever reduce income and wealth inequality.

    Bourdieu, Pierre (1973) Cultural reproduction and social reproduction, in Richard K Brown (editor) Knowledge, education, and cultural change, London: Tavistock, pages 56-68.

    Bourdieu, Pierre (1979) Distinction: a social critique of the judgment of taste.

  4. I have a lot of problems with the argument here

    1. As regards impact on inequality of labour incomes, what matters is inequality of education levels. Starting from zero, more post-school education initially increases inequality of education levels, then decreases it. Since most Australians now have post-school quals, adding more will reduce inequality.

    2. You can then subdivide between “higher” education and “vocational” education and this may change the result. But the best remedy would be to break down this distinction rather than restrict access.

    3. For inequality as a whole, the division between labour and capital is crucial. Assuming human capital is uncorrelated (or weakly correlated) with financial capital, an increase in human capital will reduce inequality

    4. Credentialism is a bogus idea. http://johnquiggin.com/2017/03/01/in-praise-of-credentialism/

  5. If you look at the earnings profiles for graduates and non-graduates it is indeed trivial to see that converting non-graduates into graduates will increase income inequality. But that assumes the profiles remain the same, i.e. that graduate occupations won’t see salaries fall as a result of an increased supply of skilled labour. This is analogous to the argument that Greenspan famously made (skilled migration reduces inequality by suppressing tech wages).

    I think the bigger question is the relationship between the education system and occupational composition. The main phenomenon in recent years hasn’t been the growth in high-skill jobs so much as the disappearance of middle-skill jobs (probably due to technology and outsourcing). It’s not clear that the labour market is absorbing the increase in graduates, or even that the graduate glut has solved skill shortages in high-skill areas. It might be the case that the labour market is wholly inelastic in this regard, and that the number of graduates we produce bears little relation to the number of high-skill jobs and thus has no effect on income inequality either way.

Leave a Comment