"Bear in mind that the wonderful things you learn in your schools are the work of many generations, produced by enthusiastic effort and infinite labor in every country of the world. All this is put into your hands as your inheritance in order that you may receive it, honor it, add to it, and one day faithfully hand it to your children. Thus do we mortals achieve immortality in the permanent things which we create in common." - Albert Einstein

Thursday, November 24, 2016

What Solves Poverty

Quite a number of people believe that education is a vehicle for upward social mobility. And it is not difficult to cite specific cases to prove this point. Anecdotes, however, can be quite far from the entire picture. Take, for instance, the suggestion that the reason why Asians are doing well compared to other minority groups in the United States is the Asian's high investment in education. Asians study hard and do well in school. Indeed, such a thought is quite inviting especially when so many specific cases can be easily cited. Careful research, however, points to a different reason. Asians are doing well in the United States simply because this group is no longer on the receiving end of discrimination. Nathaniel Hilger of Brown University shows this convincingly in his working paper, "Upward Mobility and Discrimination: The Case of Asian Americans".

The reason why Asian Americans are doing better then African Americans becomes very clear in one of the figures Hilger presents in his paper:

Above copied from Nathaniel Hilger, Upward Mobility and Discrimination: The Case of Asian Americans
The graph above includes only data from US-born individuals. In this manner, the effects of an immigration policy that often favors highly educated individuals are removed. Clearly, in 1940, Asian Americans are paid as much as African Americans, and both are paid much less than Whites, regardless of educational attainment. After 40 years, Asian Americans are now paid as much as Whites across the board. And the gap between Whites and Blacks remains large especially for those who have not finished high school.

There is likewise a great income divide between the rich and the poor in the Philippines. Clearly, from the lesson above, what cures poverty is not education, but fairness. Unskilled labor and even skilled labor wages in the Philippines fall far below those of professionals. Adding two years at the end of high school can not really reduce the income gap in the Philippines as long as minimum wages are kept low.

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