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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 family income. Typically only a current income measure is available. We argue that the gap conditional on permanent income is of greater interest, and we describe a method for identifying this gap using an auxiliary data set to estimate the relationship between current and permanent income. Current income explains only about half as much of the black-white test score gap as does permanent income, and the remaining gap in math achievement among families with the same permanent income is only 0.2 to 0.3 standard deviations in two commonly used data sets. When we add permanent income to the controls used by Fryer and Levitt (2006), the unexplained gap in 3rd grade shrinks below 0.15 standard deviations, less than half of what is found with their controls.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17610.

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Date of creation: Nov 2011
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Publication status: published as Jesse Rothstein & Nathan Wozny, 2013. "Permanent Income and the Black-White Test Score Gap," Journal of Human Resources, University of Wisconsin Press, vol. 48(3), pages 510-544.
Handle: RePEc:nbr:nberwo:17610

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  15. Bhashkar Mazumder, 2003. "Revised estimates of intergenerational income mobility in the United States," Working Paper Series WP-03-16, Federal Reserve Bank of Chicago.
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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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