Why college costs are rising

[timelets]

Labor markets in U.S. cities today are vastly more educated and skill-intensive than they were
five decades ago. Yet, urban non-college workers perform substantially less skilled work than
decades earlier, and the once robust non-college urban wage premium has largely flat-lined.
....

The urban workforce is disproportionately college-educated and foreign-born, and it has become more so over time.

[T]he second differentiating feature of urban labor markets alluded to above: the rise in immigrant intensity.. In 2015, the rural-urban gap in the foreign-born share of college adults was approximately 35 percentage points, roughly twice as large as in 1970. Similarly, the rural-urban gap in the foreign-born share of non-college adults was approximately 25 percentage points in 2015, again roughly double the gap in 1970. Foreign born workers in turn have a bimodal education distribution: they are disproportionately likely to either have completed post-baccalaureate education or to lack a high school diploma.

https://economics.mit.edu/files/16724

Also see the developments in online marketplaces, which make non-college services work standardized and replaceable. https://a16z.com/2019/01/08/marketplace-startups-then-now/

and here https://www.bloomberg.com/news/articles/2019-02-26/japan-has-a-new-guest-worker-program-just-don-t-call-it-an-immigration-policy

Comments

Huh?

[malobukov]

How can lower demand for education (due to well-educated immigrants filling those spots) explain rising tuition costs? The linked article talks about wage decrease among low-education, something completely different.

For a long time higher education cost about the same as one car. Now it's at least twice that, maybe more.

Re: Huh?

[timelets]

Demand is higher among the locals because the alternative to paying for college is declining real wages, due to the job market trends, including competition from educated immigrants.

Still unclear

[malobukov]

Educated immigrants do not compete for jobs where education is not necessary.

Instead they compete for the jobs where education is required, presumably lowering pay by increasing supply. If that's the case, then getting (expensive) education in the US should become less attractive, yet in recent years there does not seem to be any decline in educational attainment.

Even if that were the case, increased demand for education should only raise the prices temporarily. Soon free market would kick in and add more supply, bringing tuition back down. That doesn't seem to be happening either. There's no shortage of universities, yet tuition keeps growing disproportionally to fundamentals.

Re: Still unclear

[timelets]

Soon free market would kick in and add more supply, bringing tuition back down.

We are not dealing with a free market here; just check admission rates at top university programs. Higher education is not fungible and starting a new Harvard or Stanford is not an overnight task. Etc.

Not going to a university means choosing the "un-educated" job path, which means declining real wages for life. Therefore, a local is forced to get expensive education in the US, despite relatively diminishing returns.

Not so fast

[malobukov]

Top universities are by definition outliers. If immigrants with diplomas from shithole countries can compete for high paying jobs, surely Americans with diplomas from run of the mill US universities should be able to do it, too.

Re: Not so fast

[timelets]

They should be and they are, but it's very expensive because top programs set price and quality expectations. Getting a run-of-the-mill diploma is even more expensive because it doesn't provide necessary job skills/connections to be sufficiently competitive and, which is even worse, wastes time.

In any case, it's a long conversation and I can be completely wrong about everything.