The Federal Reserve Bank of Cleveland published an Economic Commentary analysing US demand for college-educated labour, concluding that relative demand for college graduates has levelled off since 2000 and that the wage premium associated with a bachelor’s degree has fallen. The report estimates the “college wage premium” has declined by about 10% since 2000, after more than doubling in the prior two decades. It attributes the shift to 21st century technological change no longer favouring college graduates, meaning demand for their skills is no longer outpacing the supply of college-educated workers, which the authors note has grown rapidly since the early 1980s. Assuming the employment share of college-educated labour continues to rise and technological progress remains without a skill bias, the authors project the college wage premium will keep declining over the coming decades.
Federal Reserve Bank of Cleveland 2025-03-31
Federal Reserve Bank of Cleveland report finds demand for college-educated workers has plateaued and the college wage premium has declined since 2000
The Federal Reserve Bank of Cleveland's Economic Commentary reveals that the demand for college-educated labour in the US has plateaued since 2000, with the college wage premium decreasing by approximately 10%. The report attributes this trend to technological changes that no longer favour college graduates, suggesting a continued decline in the wage premium if current trends persist.