Inequality and University Admissions

Imagine that next year top colleges decide to forget about academic merit and instead just admit the richest high school students who apply. What would happen to inequality? It would go down!


Employers pay relatively high salaries to graduates of elite colleges because firms assume that such graduates are really smart and received an excellent education. But as Stumbling and Mumbling explains if employers knew that any rich kid could get into a given top school then the employers would place less value on hiring such graduates. As a result, the wages of college graduates from all types of colleges would converge.