There’s a large difference between the resources of wealthy and poor universities, but that difference is mostly stable, according to a new working paper published by the National Bureau of Economic Research.
While some schools, such as Harvard University, have multibillion-dollar endowments, other universities get by on much less. However, the gap between Harvard and less well-off schools isn’t growing, despite concerns that a few institutions may soon dominate the higher education sector.
The research was published by Yan Lau, of Reed College, and Harvey Rosen, of Princeton. Notably, the $494 million endowment of Reed College is a fraction of the $19 billion endowment Princeton had at the end of 2013.
“We find that although there is considerable inequality among institutions, concerns about the inexorable growth of inequality are overblown,” Lau and Rosen wrote. “Whether one looks at income, endowment wealth or expenditure, inequality has been high but stable, exhibiting only negligible increases in recent years.”
Despite the growing stigma of inequality, Lau and Rosen actually suggest that inequality between universities might be a good thing. “Efficiency considerations, for example, suggest that because of possible economies of scale in the production and dissemination of knowledge, it might be more efficient to concentrate resources at a few universities.” That doesn’t mean the current level of inequality is the right level, it just means that some level is appropriate.
Lau and Rosen also found that mobility within the higher education sector is low. Schools with relatively low incomes and endowments typically don’t rise into the upper end of university incomes.
The researchers were only able to look at data from 2002-10. Given the impact of the Great Recession, they recommended future research be conducted as new data become available.
