How college affects upward mobility

In this study, the authors estimate the “intergenerational income mobility rate” for every college in the United States, using data taken from the individual tax returns of over 30 million students who attended college between 1999 and 2013.

As defined by the authors, a college’s intergenerational mobility rate is the product of two factors: first, the fraction of enrolled students who come from households in the bottom quintile of the income distribution; and second, the fraction of those students whose subsequent earnings place them in the top income quintile.

In a society with perfect mobility, a child’s background would have no bearing on his or her future earnings, meaning exactly 4 percent of children would move from the bottom quintile to the top quintile (and every other quintile). However, in reality only 1.7 percent of U.S. kids actually manage this feat.

So what role do U.S. colleges play in promoting upward mobility? According to the authors, their analysis of the data yielded four main findings.

First, access to colleges varies greatly by parent income. For example, children whose parents are in the top one percent of the income distribution are seventy-seven times more likely to attend an Ivy League college than those whose parents are in the bottom income quintile. Contrary to public perception, colleges in America are just as socioeconomically segregated as the neighborhoods where children grow up.

Second, within a given college, children from low- and high-income families end up earning very similar amounts. In other words, colleges are successfully “leveling the playing field” for the students they admit, and poor students don’t appear to be “overmatched” at selective colleges as some observers have suggested. On average—and regardless of socioeconomic background—the subsequent earnings of students who attend “elite” schools put them in roughly the eightieth income percentile versus the seventieth percentile for students at other four-year colleges and the sixtieth percentile for students at two-year colleges.

Third, upward mobility rates vary substantially across colleges. For example, California State University–Los Angeles catapults a whopping 10 percent of its student body from the bottom quintile to the top, and some campuses of the City University of New York (CUNY) and the University of Texas system have mobility rates above 6 percent. Yet one in ten colleges has a mobility rate of less than 1 percent. (More on these variations below.)

Finally, although the fraction of low income kids attending college increased from 38 to 46 percent during the 2000s, the number attending colleges with high mobility rates fell sharply, while the fraction of low-income students at four-year colleges and selective schools was unchanged—even at Ivy League colleges, which enacted substantial tuition reductions and other outreach policies. Most of the increase in low-income enrollment occurred at two-year colleges and for-profit institutions.

According to the authors, factors such as location, size, and net tuition don’t predict a significant fraction of a school’s mobility rate. Nor is there a clear difference between public and private schools. On average, the former tend to admit more low-income students, while the latter are more successful with the low-income students they admit. But these effects tend to cancel each other out. For example, the twelve “Ivy-Plus” colleges (Ivy League schools plus other elite universities like Stanford) have the highest success rates, with almost 60 percent of students from the bottom quintile reaching the top quintile; yet because only 4 percent of students in these schools are from the bottom quintile, their average mobility rate is just 2.2 percent. A similar pattern emerges for four-year schools, which have only slightly higher mobility rates than two-year schools, despite their higher success rates. Notably, for-profit schools have higher average mobility rates than non-profit schools, though there is great variation within this sector, which includes some of the best and worst mobility rate schools.

Overall, greater access is correlated with lower success rates for lower-income students. But according to the authors, “the variation in access among colleges with comparably high success rates suggests that there are educational models that achieve good outcomes while offering access to a large number of low-income students.” And in fact, many of the colleges with the highest mobility rates are mid-tier public schools.

Because the study doesn’t account for the quality of the students that an institution enrolls, ultimately it can’t tell us what effect colleges have on students. However, it does suggest that certain institutions are worth a closer look. In particular, the colleges with mobility rates in the top decile are of interest because their median annual instructional expenditure is only $6,500 per student. The median “Ivy-Plus” college spends $87,000.

As those numbers suggest, if we want to preserve the American dream cost-effectively, we should probably do more of whatever mid-tier public universities are doing.

Any theories?

SOURCE: Raj Chetty, John N. Friedman, Emmanuel Saez, Nicholas Turner, and Danny Yagan, “Mobility Report Cards: The Role of Colleges in Intergenerational Mobility,” January 2017.

 
 
David Griffith
David Griffith is a Senior Research and Policy Associate at the Thomas B. Fordham Institute.