December 2010, John Schmitt and Heather Boushey

At least since the early 1990s, the share of young people earning a four-year college degree has not increased as quickly as many economists would like. A higher share of young people today have college degrees than at any point in our nation’s history, yet many economists remain concerned that the supply of college graduates is not keeping pace with what they see as an accelerated demand for the skills taught at college. This college gap seems particularly large for young men, who are now substantially less likely than young women to earn a four-year college degree.

These historical trends present economists with two college conundrums. The first: Why haven’t young people responded to higher returns to college by rushing to attend college? The demand side of the market is sending a clear price signal that there are much higher earnings for college-educated workers to be had upon graduation, but the supply side has responded only haltingly. College completion rates are up, but not very much. The second conundrum: Why have men, who are receiving the same signals as women, lagged particularly far behind?

The authors find that for many young people, the economic case for attending college may not be as clear cut as it appears based on the experience of the average graduate. For those college graduates at the middle and top of the postcollege pay scale, college in hindsight looks like a sound investment, but not all graduates do this well. And a small but important share of graduates actually do no better than their counterparts who left school after high school—even before taking the costs of college into account.