Women Respond Better to Monetary Benefits of College

Today more women than men attend and graduate from college at least partly because the supply of women is more responsive to changes in the monetary benefits of college, according to research presented by Nobel laureate Gary Becker, University Professor of Economics and of Sociology, and Kevin Murphy, George J. Stigler Distinguished Service Professor of Economics, and PhD student William Hubbard.

“Evidence of grades in school indicates that women have both higher grades on average and a smaller inequality in their distribution than men,” Hubbard said during New Directions in the Economic Analysis of Education, presented by the Milton Friedman Institute for Research in Economics, at the Hyde Park campus on November 21. “Because of these gender differences in costs, in particular the difficulty of college, the supply of women is more elastic than that of men with respect to changes in monetary returns.”

Given the great breadth of benefits college education provides and that these benefits have increased over time, the worldwide rise in college education is not surprising, said Becker, who co-organized the two-day conference. “What is striking, however, is the different responses of men and women to the rising benefits of college,” he said.

In the United States, rates of college completion among men have remained almost flat since the 1970s, while college completion among women has risen steadily and rapidly during the same period, Becker said. In 2007, more than 57 percent of bachelor’s degrees were awarded to women, he said. “The overtaking of men by women in higher education is not a phenomenon unique to the U.S.,” Becker said.

Benefits of college for men and women increased over time on virtually every factor Becker and his colleagues measured, including lifetime earnings gain, health, marital prospects, productivity of investments in children, he said. “Although some of the college benefits increased faster for women than men, the benefits from college are still lower for women in most dimensions,” Becker said. “Yet women finish school at much greater rates than men.”

Gender differences in earnings, health, marriage, and other returns from college greatly narrowed after the 1970s, Murphy said. “Therefore, even if the means and distributions of the costs of attending college had been the same for males and females, the male advantage in college attendance would have narrowed considerably over time,” he said. “However, if costs were the same, gender differences in college attendance would not have changed in so many countries in favor of females, since their monetary and non-monetary returns from college are still generally lower or at least no higher than those of males.”

The gender differences in mean non-cognitive abilities – reflected in women’s higher grades and higher standardized test scores – implies that as total benefits from college narrowed over time between men and women, the lower average full cost to women could help explain why women overtook men in their likelihood of graduating from college, Murphy said.

“The gender differences in supply elasticity imply that the increased demand for college graduates that occurred in most countries during the past 30 years would have increased the supply of women to college by more than the supply of men,” he said. “This, too, would have caused women’s college attendance to surpass that of men.”

                                                                                                                — Phil Rockrohr