College Tuition and Income Inequality

Zhifeng Cai and Jonathan Heathcote

No 569, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: This paper evaluates the role of rising income inequality in explaining observed growth in college tuition. We develop a competitive model of the college market in which college quality depends on instructional expenditure and the average ability of admitted students. An innovative feature of our model is that it allows for a continuous distribution of college quality. We find that observed increases in US income inequality can explain more than the entire observed rise in average net tuition since 1990 and that rising income inequality has also depressed college attendance.

Keywords: College tuition; Income inequality; Club goods (search for similar items in EconPapers)
JEL-codes: I22 I23 I24 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2018-07-31
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: College Tuition and Income Inequality (2022)
Working Paper: College Tuition and Income Inequality (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:569

DOI: 10.21034/sr.569

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