> The biggest puzzle is how to explain why recent grads still command significantly higher incomes than nongrads without accumulating significantly more wealth.
Is it? Permit this armchair economist a theory:
People with degrees tend to use those degrees in pursuit of career development.
Career development causes people to move to "cluster" regions e.g. Silicon Valley, New York
"Cluster" regions tend to have a high cost of living due to insufficient housing and transportation infrastructure which didn't grow at the rate of other economic development
The high cost of living eats up the additional income from the degree, preventing wealth accumulation.
Add on long-term macroeconomic effects of the fall in entrepreneurship and other indexes of economic dynamism, aligned with increases in consumer spending, and you have a high-income, relatively comfortable serfdom.
To test the theory, try controlling for geographic area - there should be a clear increase in wealth accumulation of degree-holding entrepreneurs in low cost of living areas, compared to non-degree holders who still somehow eke out a living in high cost of living areas.
Some things cost the same nationwide, for example the MSRP of a new truck. A college degree means higher income and certain higher expenses (e.g, housing), but not others. Your college debt balance is the same regardless if you earn $70,000 in an entry level Software Engineering job in Philadelphia or $120,000 in SFBA. That creates room for some arbitrage and wealth building.
Is it? Permit this armchair economist a theory:
People with degrees tend to use those degrees in pursuit of career development. Career development causes people to move to "cluster" regions e.g. Silicon Valley, New York "Cluster" regions tend to have a high cost of living due to insufficient housing and transportation infrastructure which didn't grow at the rate of other economic development The high cost of living eats up the additional income from the degree, preventing wealth accumulation. Add on long-term macroeconomic effects of the fall in entrepreneurship and other indexes of economic dynamism, aligned with increases in consumer spending, and you have a high-income, relatively comfortable serfdom.
To test the theory, try controlling for geographic area - there should be a clear increase in wealth accumulation of degree-holding entrepreneurs in low cost of living areas, compared to non-degree holders who still somehow eke out a living in high cost of living areas.