Education and Inequality

From Peter Orszag, President Obama's Director of the Office of Management and Budget:

This slowdown in the growth rate of educational attainment is a problem both in terms of attenuated economic growth (the hard head part) and increased economic disparities (the soft heart part). As Claudia Goldin and Lawrence Katz have shown, both effects are traceable to a decline in the relative supply of highly educated workers – which dampens economic growth while also increasing the wage premium for being a college grad. Said differently, the fewer college grads we produce, the slower overall economic growth and the higher the salaries for those fortunate enough to go to college. And since we know that those from lower-income families are less likely to go to college and graduate (as compared with students from higher-income families with similar test scores), the overall result is that we perpetuate inequality.

Claudia Goldin spoke to the Economics majors at Davidson College last year and gave an exceptional talk on this very subject. Education has to be at the center of any social policy geared at reducing inequality in this country.