Education, Inequality, and Complementarities

by Will Wilkinson on March 4, 2008

Discussing Brink Lindsey’s outstanding New Republic piece on why the education premium isn’t drawing more people into higher education (about which more later), Yglesias says:

… nothing is going to change policywise unless people think that reconciling ourselves to ever-growing inequality is wrong and, therefore, we ought to be interested in ways to reverse the trend. Meanwhile, I think it’s not wrong to think of some of the aspects of our school system’s poor treatment of low-income kids as precisely representing affluent people gaming the system (by, among other things, withdrawing across jurisdictional boundaries which they then zone with large lot requirements and “overcrowding” rules so as to prevent poor people from moving there) to preserve positions of privilege for their children.

I think “gaming the system” is a bad way of looking at the structural barriers to the upward mobility of the poor created by the behavior of wealthier people. The problem is that (a) the reasonable motivation of the middle and upper classes to do the best they can for their kids and (b) the structure of our public educational institutions together combine to create a de facto barrier to the opportunity of poorer kids to get a decent education and subsequently a decent wage that really makes work worthwhile. There is no point in attacking (a). The problem is (b).

Here’s something sort of related that puzzles me. Suppose there is a growing premium for a more or less general high level of cognitive functioning. No matter how many people we train to achieve this higher levels of functioning, there will always be some kind of normal-ish distribution in it. Now suppose (this is the big hypothetical) the tendency of new technology is to increase the rate at which productivity increases as you move right across the distribution, and that wages tend to reflect productivity. In this scenario, we’ll get increasing earnings inequality no matter how well we educate people, i.e., even if we shift the whole cognitive functioning distribution to the right. Correct? Real economists?

Now this doesn’t really concern me, since this is a scenario in which everyone’s productivity, and therefore everyone’s wage rate, is rising, and I don’t care about inequality per se. I’m just wondering how much our world is like that, or is becoming like that.

  • Brink's article was lousy. This was discussed at EconLog.

    So it appears we are headed for a situation of genetics making more and more of a difference. This is a disturbing prospect.
    Why? What difference does it make to me whether it is my environment or my genes holding me back? The fact that major environmental hindrances have been alleviated seems an unmitigated positive to me.
  • "representing affluent people gaming the system (by, among other things, withdrawing across jurisdictional boundaries which they then zone with large lot requirements and “overcrowding” rules so as to prevent poor people from moving there"

    Also, how in the world is the right of exit considered to be a negative to overall performance? Do your service providers provide better or worse performance when they know you can leave, or when they're guaranteed that you must stay? Is there really a belief that if only we forced those nasty rich kids to stay, that somehow those schools would improve? Without any incentive to?

    Now, to the extent that those affluent people are using policy tools to prevent poor people from moving near them, that's not so nice, but I think there may be other factors.
  • Bruce K. Britton
    As the environmental factors affecting quality of education become more and more equal, they will account for less and less of the variance among individuals, and other factors, that have not been equalized, such as genetic differences among individuals, will account for more and more of the variance. In the same way, if the genetic factors were equalized, such as by making everyone a clone of Will Wilkinson (say) then no variance would be accounted for by genetic differences, there being no genetic differences, and all the variance would be accounted for by other factors, such as environmental differences. But there is no prospect of everyone being genetically identical, and there is a prospect of environmental differences becoming less and less. So it appears we are headed for a situation of genetics making more and more of a difference. This is a disturbing prospect.
  • JA
    Will, you write:

    "I think “gaming the system” is a bad way of looking at the structural barriers to the upward mobility of the poor created by the behavior of wealthier people. The problem is that (a) the reasonable motivation of the middle and upper classes to do the best they can for their kids and (b) the structure of our public educational institutions together combine to create a de facto barrier to the opportunity of poorer kids to get a decent education and subsequently a decent wage that really makes work worthwhile."

    Truly, 'A' is incomplete: it's not the motivation but the performance of that motivation that combines with 'B' to create the de facto barrier.

    That doesn't mitigate Ygelsias's idiosyncratic error, of course, but it's worth noting for this reason: Yglesias can't argue against parents, of whatever wealth, being motivated to care for their kids, but I'm quite certain he'd have no problem imposing a ban on particular performances of this motivation, if he deemed them to have negative external effects on the thrice disadvantaged. I think that's a conversation worth having, if only to flush out what Conrad called the "flabby, pretending, weak-eyed devil of a rapacious and pitiless folly" that animates much of Yglesias' politics.
  • Jeff
    Will,

    You may be on to something there.
  • mk
    Suppose there is a growing premium for a more or less general high level of cognitive functioning. No matter how many people we train to achieve this higher levels of functioning, there will always be some kind of normal-ish distribution in it. Now suppose (this is the big hypothetical) the tendency of new technology is to increase the rate at which productivity increases as you move right across the distribution, and that wages tend to reflect productivity. In this scenario, we’ll get increasing earnings inequality no matter how well we educate people, i.e., even if we shift the whole cognitive functioning distribution to the right.

    There are two ways to change a normal distribution: change the mean or change the standard deviation.

    If we can increase the mean but decrease the standard deviation, we can decrease the skills inequality. Then it is possible (but not inevitable) to decrease the wage inequality.

    Of course if you just increase the mean of the skills distribution, but do not decrease the standard deviation, you can't reduce wage inequality.

    It makes sense to not hew to closely to the "pure normal" distribution because some policies probably have neither the mean-shifting nor the std-dev-reducing effect. For example, a training program targeted disproportionately to poor lower-skilled people should increase their skills but it shouldn't really decrease the skills of higher-skilled people.

    I don't think it helps too much to talk of a multi-modal normal-style distribution (many humps, one per subgroup, but each hump is normal-shaped) because even within one of the "humps", you can always help out the lower-skilled people without really helping or hurting the higher-skilled ones.

    It would be interesting to know how economists treat these variables.

    I would surmise that while genetic factors ("raw intelligence") could be reasonably approximated by a many-humped normal-style distribution, "public policy assistance" (training, etc.) is a second input to a person's skill set, which definitely does not have to be normal, many-humped normal, or anything else.

    Because of that, "skill level" also need not be normal-shaped. And so, there is not a strong a priori mathematical reason to suspect inequality will always increase.

    That said, if I were a betting man, I'd be it would increase.
  • wkw
    [quote=Will]Now suppose (this is the big hypothetical) the tendency of new technology is to increase the rate at which productivity increases as you move right across the distribution, and that wages tend to reflect productivity. In this scenario, we’ll get increasing earnings inequality no matter how well we educate people, i.e., even if we shift the whole cognitive functioning distribution to the right.[/quote]

    it would be nice if the U.S. economy consistently operated this way, but it doesn't. unfortunately, we don't have a very clear idea of what increases productivity in many cases. technology sometimes does, but it's pretty hard to quantify something as nebulous as "technological advance" when attempting to measure the components of productivity growth. education sometimes might, but there's no clear consensus in the literature on whether education does more signaling/sorting or whether it actually has real value in increasing productivity. almost assuredly, it's a combination of both, but where the relative weights lie is still something of a mystery.

    also, wages often do not reflect changes in productivity, since it can be quite difficult to discern which individuals' productivity have increased. i'm afraid the Ec 101 models which claim that workers are paid according to their marginal productivity don't carry over very well to the real world.
  • Up until recently, I didn't believe this, but my significant other's experiences have convinced me that the problem really is bad public schools, not bad kids, or bad conditions for those kids.

    Yglesias implicitly accepts the idea that the poor kids' schools are bad, but what he doesn't address is that the rich kids' public schools are pretty bad educators too -- just that they have non-school resources to help them succeed, as opposed to (often) non-school resource that help them fail.

    Kids are eager to learn when they enter the public school system at 6 (and even much older), no matter if they go to a ritzy suburban school or a inner-city one. If they aren't learning the information and the desire to stay in the system, it's because their educators aren't doing a good job of it. I know I went to a theoretically "nice" suburban public school (nice=people moved to the town explicitly for their kids to go there) and I remember it being terribly bad at educating. The only reason I ended up as well as I did were my parents.
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