In this Q&A with MIT News, MIT economics professor David Autor urges us to expand the discussion about inequality beyond just the “1 percent.”
Today’s wealth gap does not just exist between the richest 1 percent of the population and everyone else; there have been growing inequalities among the less-wealthy 99 percent of people, too. In an article published today in Science, MIT economist David Autor contends that much of our present inequality stems from disparities in education. This has evolved in two directions: From 1980 to 2012, inflation-adjusted, full-time earnings of college-educated males increased anywhere from 20 percent to 56 percent, depending on whether they also acquired graduate degrees. Conversely, real earnings of high school graduates fell 11 percent, and earnings of high school dropouts fell 22 percent. MIT News talked with Autor about inequality.
Q. You are focused on inequality among the so-called “99 percent,” not between the 1 percent and the 99 percent. Why?
A. There’s a real national debate about the significance and causes of inequality. This public debate is dominated by the discussion of the top 1 percent. And the top 1 percent is important, but focusing on the top 1 percent conveys the message that the game is all rigged, that if you’re not in the elite stratum, there’s nothing to shoot for. And that’s just not the case. The growth of skill differentials among the other 99 percent is arguably even more consequential than the rise of the 1 percent for the welfare of most citizens.
Here’s a concrete way to see it: The earnings gap between the median college-educated two-income family and the median high school-educated two-income family rose by $28,000 between 1979 and 2012. This [shift] — which excludes the top 1 percent, since we’re focusing on medians — is four times as large as the redistribution that has taken place from the bottom 99 percent to the top 1 percent of households in the same period.
Q. What accounts for inequality among the 99 percent, then?
A. The single most important factor is the rising return on postsecondary education. That explains a lot of the growth and variance, and that is pretty well explained by supply and demand factors. There was a sharp deceleration in production of newly minted college graduates from about 1980 forward, and that led immediately to a growth in the skill premium. After 2005 there’s been an acceleration in production of college graduates, and you see the skill differential start to plateau.
If you had to give a person a single piece of economic advice, it would not be: Act like Gatsby and try to get into the top 1 percent. It would be: Go get a college education at a decent school.
And, take advantage of the free online resources available in MIT OpenCourseWare — like these courses by Professor Autor: