In 2014, stories about rising inequality in the United States made headlines. In his 2014 State of the Union address, President Obama focused on inequality, saying “Inequality has deepened. Upward mobility has stalled.” A book by a French economist about inequality, Capital by Thomas Piketty, became an unexpected best seller. One of the most important drivers of inequality in income is inequality in a country’s educational system. Educational systems reflect a society’s level of inequality, and, in turn, determine the levels of inequality for future generations.
At the same time that income and educational inequality in the United States are increasing, they are decreasing in Brazil. The United States and Brazil are interesting countries to compare. Both have histories in which race-based slavery profoundly shaped their development. The United States is the most unequal country among the developed countries, and Brazil is one of the most unequal countries in the world. A standard measure of inequality is the Gini coefficient, which would be equal to 1 if one group owned all the income and would be equal to zero in a society where income was distributed equally. In 2013, the U.S. Gini coefficient was 0.479, which was an increase from 0.43 in the early 1990s. In 2012, Brazil’s Gini was 0.527, down from around 0.60 in the early 1990s.
Why has inequality declined in Brazil while it increased in the United States? Researchers credit an economy that, until recently, was growing at an impressive rate, increases in the minimum wage, and Bolsa Família, a national social program that provides poor families with a monthly payment when their children attend school and receive medical check ups. In the United States, the minimum wage was last increased in 2009, when it was set at $7.25 per hour. During the economic recovery, the wages for earners at the top deciles have increased at a faster rate than wages for the bottom deciles. From 2009 to 2012, the income of the top 1 percent grew by 31.4 percnet compared to 0.4 percent for the bottom 99 percent (Saez 2013).
In the area of education policy, Brazil is focusing attention on increasing the quality of public primary and secondary education, while increasing access to university education. In the United States, Race to the Top grants provide resources to improve school quality. To improve access to post-secondary education, in the 2015 State of the Union address, President Obama proposed an initiative to provide two years of college education at no cost to students.
Inequality in university education in the United States
University education can be a channel for income mobility. Jobs that require university degrees are more highly paid than jobs that require a high school diploma.
Of Americans aged 25 to 34, 44 percent had college degrees in 2011. The United States used to have a high proportion of its work force with college degrees compared to other developed countries, but in 2011, 11 Organisation for Economic Co-operation and Development (OECD) countries had higher proportions of young people with a college degree.
In the United States, rising inequality in income is reflected in rising inequality in college attendance and completion. A recent report by the Pell Institute investigates trends in higher education equity in the United States over the past 45 years. The percentage of people from families in the poorest 25 percent of the income distribution who had attained a Bachelor’s degree by age 24 was 6 percent in 1965 and had only increased to 9 percent by 2013. By contrast, the percentage of people from the richest 25 percent who had attained a Bachelor’s degree by age 24 increased from 40 percent to 77 percent. The gap was smaller when looking at the proportion of 18 to 24 year olds who enrolled in college. Forty-five percent of young people from the poorest 25 percent of the distribution attended college, compared to 81 percent of young people from the richest 25 percent of the distribution. However, among students who enter college, only 21 percent of those from poor families will earn a Bachelor’s degree by age 24, compared to 99 percent of students from rich families. Retention is a problem for students from poor families.
The affordability of a quality university education for students from poor and middle class families has decreased. Students from poor families are much more likely to attend private for-profit two and four year colleges than students from rich families. The Pell Institute calculated the average net price of college, which subtracts grant aid from the cost of college attendance. As recently as 2000, the net price represented about 45 percent of average family income for students from the poorest 25 percent. Now it represents about 84 percent of average family income for poor students.
The tuition for the highest quality U.S. universities has increased dramatically. Public universities, including the flagship state universities, such as the University of Illinois, have experienced dramatic cuts in state funding. They have chosen to make up for the cuts by increasing tuition and by seeking more international and other out-of-state students, who pay higher tuition rates than in-state students. This process has been accelerated during the recession and recovery period. For example, at the University of Illinois, in 2003, state funds accounted for 24 percent of total funding, and tuition accounted for 16 percent. In 2014, state funds accounted for 12 percent of total funding, and tuition accounted for 33 percent. Students and their families are expected to pay a higher and higher proportion of the cost of a university education.
Inequality in university education in Brazil
In Brazil, the percentage of the population with a university education is low, at only 14 percent of 25 to 34 year olds. Federal policy has sought to expand access to college education through quotas at the public universities and subsidies for poor students to attend private universities through the PROUNI and FIES programs.
Public universities are free in Brazil, charging no tuition or fees. The educational system reflects the high levels of inequality in Brazil’s history. At the primary and secondary educational levels, public schools are considered to be of low quality, whereas private schools are expensive, but high quality. At the university level, the most highly ranked universities are public. Admission is very selective and based solely on performance on university-specific entrance exams called the vestibular. Brazilian students apply to specific programs in the universities, and there may be as many as 200 applicants for each space in programs like medicine. Performance on the vestibular is related to socioeconomic background, with students from rich families outperforming those from poor families and thereby obtaining access to high quality, free university educations.
As the number of students who graduate high school increases, demand for a university education has increased. Although new public universities were built, most of the expansion has occurred through the growth of private universities, which are often of low quality. About 80 percent of university students attend private universities. The typical Brazilian student at a private university comes from a low-income family and has to work to afford tuition. Usually students work during the day and attend school at night.
The growth of private university enrollment is directly associated with PROUNI and FIES, which are federal programs to help finance poor students who attend private universities. PROUNI provides partial and full scholarships. Currently, the program benefits about a half million students. Meanwhile, FIES provides loans with highly subsidized interest rates and has benefitted more than 1.2 million students (MEC 2013). The number of beneficiaries in both programs corresponds to about 20 percent of all students enrolled in Brazilian private universities.
The Brazilian government has also tried to facilitate access of poor students to public universities through sweeping policy changes for federal universities. In 2012, the Senate passed a law that required federal universities to follow admissions quotas. Half of all spaces in the federal universities are to be reserved for applicants who graduated from public high schools. A quarter of spaces must be allocated to applicants who come from families with low incomes. The racial composition of the students in the universities must reflect the racial composition of the state where the university is located. Some state universities have also decided to follow the federal guidelines on quotas. This contrasts to U.S. policies, in which universities have moved away from giving preferences to applicants on the basis of race.
The quotas are controversial and are currently being enacted at scale. Students coming from poorer socioeconomic backgrounds will need support to be able to perform well at the university level.
Implications for policy
The proportion of young people who have completed college is four times higher in the United States than in Brazil. The United States remains a more equal society than Brazil, although in Brazil, inequality was decreasing whereas in the United States, it was increasing.
Both countries put relatively more funding into college education than primary education. In the United States, the ratio is 3 to 1, and in Brazil, it is 6 to 1. Both ratios are very high compared to other OECD countries. To increase access of students from poor backgrounds to college, the quality of public schooling at the primary and secondary levels must increase. Bailey and Dynarski find that about half of the inequality in university educational attainment is due to the fact that students from poor families are less likely to finish high school than students from wealthy families.
In both countries, expansion of college opportunities for students from poor backgrounds has come through private colleges and universities. In the United States, the for-profit private sector accounts for half of enrollments among students from poor backgrounds. In Brazil, 80 percent of students are enrolled in private colleges, and little is known about their quality. More information provided to students about graduation rates and employment rates for graduates of individual colleges and universities might be helpful.
References
Andrews, George Reid. 2014. “Racial inequality in Brazil and the United States, 1990-2010.” Journal of Social History 47(4): 829-854.
The Atlantic. 2014. “Things we learned about income inequality in 2014.” December 23.
Bailey, Martha and Susan Dynarski. 2011. Gains and Gaps: Changing inequality in U.S. college entry and completion. Population Studies Center Report 11-746. Ann Arbor, MI: Population Studies Center, University of Michigan.
Barr, Andrew and Sarah E. Turner. 2013. “Expanding enrollments and contracting state budgets: The effect of the great recession on higher education. Annals AAPSS 650: 168-193.
DeNavas-Walt, Carmen and Bernadette Proctor. 2014. Income and Poverty in the United States: 2013. U.S. Census Bureau.
Francis, Andrew and Maria Tannuri-Pianto. 2012. “The redistributive equity of affirmative action: Exploring the role of race, socioeconomic status and gender in college admissions.” Economics of Education Review. 31: 45-55.
Ministério da Educação. 2014. “Prestação de Contas Ordinárias Anual: Relatório de Gestão do Exercício de 2013 ”. Accessed at http://portal.mec.gov.br/index.php?option=com_docman&task=doc_download&gid=15998&Itemid=
Obama, Barack. 2015. “Remarks by the President in the State of the Union Address January 20, 2015.”
Obama, Barack. 2014. “President Barack Obama’s State of the Union Address.” January 28.
OECD. 2013. Education at a glance 2013: The United States.
OECD. 2014. Education at a glance 2014: Brazil.
Pell Institute 2014. Indicators of higher education equity in the United States: 45 year trend report.
Saez, Emmanuel. 2013. “Striking it richer: The evolution of the top incomes in the United States.” UC Berkeley working paper.
U.S. Census Bureau. Table A-2. Selected measures of household income dispersion: 1967 to 2009.
World Bank. 2015. GINI index.