Revealing the Concealed Effect of Top Earnings on the Gender Gap in the Economic Value of Higher Education in the United States, 1980–2017

Abstract

Abstract The expansion of women's educational attainment may seem to be a promising path toward achieving economic equality between men and women, given the consistent rise in the economic value of higher education. Using yearly data from 1980 to 2017, we provide an updated and comprehensive examination of the gender gap in education premiums, showing that it is not as promising as it could and should be. Women receive lower rewards to their higher education across the entire wage distribution, and this gender gap increases at the very top education premiums—the top quarter and, even more so, the top decile. Moreover, insufficient theoretical and methodological attention to this top premium effect has left gender inequality concealed in the extensive empirical studies on the topic. Specifically, when we artificially censor the top at the 80th wage percentile, the gender gaps in education premium reverse. Lastly, the growth in earnings inequality in the United States, which is greatly affected by the expansion of top earnings, is associated with the growing gender gap in education premiums over time. We discuss the meaning and implications of this structural disadvantage at a time when women's educational advantage keeps growing and higher education remains the most important factor for economic attainment.