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Permanent Income and the Black-White Test Score Gap

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  • Jesse Rothstein
  • Nathan Wozny

Abstract

Analysts often examine the black-white test score gap conditional on current family income. We describe a method for identifying the gap conditional on the family’s permanent income. Current income explains only about half as much of the black-white test gap as does permanent income, and the gap among families with the same permanent income is only 0.2 to 0.3 standard deviations in two commonly used samples. When we add permanent income to the controls used by Fryer and Levitt (2006), the unexplained gap in third grade shrinks below 0.15 SDs, less than half of what is found with their controls.

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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 48 (2013)
Issue (Month): 3 ()
Pages: 510-544

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Handle: RePEc:uwp:jhriss:v:48:y:2013:iii:1:p:510-544

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Web page: http://jhr.uwpress.org/

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  1. Gordon B. Dahl & Lance Lochner, 2011. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," Working Papers 2011-022, Human Capital and Economic Opportunity Working Group.
  2. David M. Blau, 1999. "The Effect Of Income On Child Development," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 261-276, May.
  3. Joseph G. Altonji & Ulrich Doraszelski, 2005. "The Role of Permanent Income and Demographics in Black/White Differences in Wealth," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
  4. Bhashkar Mazumder, 2001. "The mis-measurement of permanent earnings: new evidence from Social Security earnings data," Working Paper Series WP-01-24, Federal Reserve Bank of Chicago.
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  7. Krueger, Alan & Rothstein, Jesse M & Turner, Sarah, 2006. "Race, Income, and College in 25 Years: Evaluating Justice O'Connor's Conjecture," University of California at Berkeley, Center for Studies in Higher Education qt9bn6m1hs, Center for Studies in Higher Education, UC Berkeley.
  8. Roland G. Fryer & Steven D. Levitt, 2005. "The Black-White Test Score Gap Through Third Grade," NBER Working Papers 11049, National Bureau of Economic Research, Inc.
  9. Darren Lubotsky & Martin Wittenberg, 2006. "Interpretation of Regressions with Multiple Proxies," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 549-562, August.
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  12. Kerwin Kofi Charles & Erik Hurst & Nikolai Roussanov, 2009. "Conspicuous Consumption and Race," The Quarterly Journal of Economics, MIT Press, vol. 124(2), pages 425-467, May.
  13. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6 National Bureau of Economic Research, Inc.
  14. Steven Haider & Gary Solon, 2006. "Life-Cycle Variation in the Association between Current and Lifetime Earnings," NBER Working Papers 11943, National Bureau of Economic Research, Inc.
  15. Roland G. Fryer, Jr. & Steven D. Levitt, 2002. "Understanding the Black-White Test Score Gap in the First Two Years of School," NBER Working Papers 8975, National Bureau of Economic Research, Inc.
  16. Kenneth Y. Chay & Jonathan Guryan & Bhashkar Mazumder, 2009. "Birth Cohort and the Black-White Achievement Gap: The Roles of Access and Health Soon After Birth," NBER Working Papers 15078, National Bureau of Economic Research, Inc.
  17. Bhashkar Mazumder, 2003. "Revised estimates of intergenerational income mobility in the United States," Working Paper Series WP-03-16, Federal Reserve Bank of Chicago.
  18. Elizabeth M. Caucutt & Lance Lochner, 2005. "Borrowing constraints on families with young children," Proceedings, Federal Reserve Bank of Cleveland, pages 39-48.
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Cited by:
  1. Bhashkar Mazumder & Jonathan Davis, 2011. "Parental Earnings and Children's Well-Being and Future Success: An Analysis of the SIPP Matched to SSA Earnings Data," Working Papers 11-12, Center for Economic Studies, U.S. Census Bureau.

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