Education, Assortative Mating, and Inequality
By Arnold Kling
I am going to combine comments on two papers cited by Tyler Cowen. First, he cites a paper on inequality and mobility. It argues that skill differentials are widening, and that parental education seems to be increasingly important. (Note that Peter Orszag has pointed to research suggesting inequality in longevity shows a similar pattern.)
Second, Tyler points to a paper on how firms learn worker quality. The significance of the paper is that firms can learn worker quality quickly by observing workers on the job. This implies that Bryan’s favorite hypothesis, which is that firms use education as a signal for worker quality, lacks a rational basis.
In my view education is mainly about indoctrination to give you more productive habits. So yes it is learning, but not in the way they might have told you, and that is why it so often does not feel like learning.
Both of these papers support my pet theory of everything, which is that the value of college is in assortative mating. Consider the power of this theory.
1. It explains rising tuition costs. If your goal as a parent is to put your child in a milieu of affluent children, then a school with higher tuition may be more attractive to you. The demand curve will not be elastic–it may even be upward-sloping.
2. It explains rising inequality. Fifty years ago, well-educated men might have chosen wives for their ability to cook and clean. Now, they are looking for well-educated women, who in turn are looking for well-educated men. These matches serve to raise inequality by themselves. But they also increase the inequality in subsequent generations, by decreasing the share of children that come from combinations of high-SES and low-SES parents (SES = Socioeconomic Status). Instead, you see more families where both parents come from the same end of the SES spectrum.
3. It explains why education is highly correlated with income, even though the skill-value-added of college education appears to be low. Going to college increases your chances of landing a high-income spouse. That raises your income, even if your skills do not go up. Moreover, going to college is highly correlated with having affluent and intelligent parents, which in turn means that young people who go to college will themselves tend to be intelligent and start out with some financial flexibility to invest in their human capital in other ways (by traveling abroad, for example). So there will be a correlation between college and income, even if there is not much causation.