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Income Inequality, Social Mobility, and the Decision to Drop Out of High School

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  • Melissa S. Kearney
  • Phillip B. Levine

Abstract

This paper considers the role that high levels of income inequality and low rates of social mobility play in driving the educational attainment of youth in low-income households in the United States. Using high school degree status from five individual-level surveys, our analysis reveals that low-socioeconomic status (SES) students, and particularly boys, who grow up in locations with greater levels of lower-tail income inequality and lower levels of social mobility are relatively more likely to drop out of high school, conditional on other individual characteristics and contextual factors. The data indicate that this relationship does not reflect alternative characteristics of the place, such as poverty concentration, residential segregation, or public school financing. We propose that the results are consistent with a class of explanations that emphasize a role for perceptions of one’s own identity, position in society, or chances of success. In the end, our empirical results indicate that high levels of lower-tail income inequality and low levels of social mobility hinder educational advancement for disadvantaged youth.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 20195.

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Date of creation: Jun 2014
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Handle: RePEc:nbr:nberwo:20195

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  1. Richard J. Murnane, 2013. "U.S High School Graduation Rates: Patterns and Explanations," NBER Working Papers 18701, National Bureau of Economic Research, Inc.
  2. Corak, Miles, 2013. "Income Inequality, Equality of Opportunity, and Intergenerational Mobility," IZA Discussion Papers 7520, Institute for the Study of Labor (IZA).
  3. Belley, Phillippe & Lochner, Lance, 2009. "The Changing Role of Family Income and Ability in Determining Educational Achievement," CLSSRN working papers, Vancouver School of Economics clsrn_admin-2009-9, Vancouver School of Economics, revised 02 Feb 2009.
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  10. Susan E. Mayer, 2000. "How Did the Increase in Economic Inequality between 1970 and 1990 Affect American Children's Educational Attainment?," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 141, Northwestern University/University of Chicago Joint Center for Poverty Research.
  11. Tara Watson, 2009. "Inequality and the Measurement of Residential Segregation by Income In American Neighborhoods," NBER Working Papers 14908, National Bureau of Economic Research, Inc.
  12. Leah Boustan & Fernando Ferreira & Hernan Winkler & Eric M. Zolt, 2013. "The Effect of Rising Income Inequality on Taxation and Public Expenditures: Evidence from U.S. Municipalities and School Districts, 1970–2000," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1291-1302, October.
  13. Garance Genicot & Debraj Ray, 2014. "Aspirations and Inequality," NBER Working Papers 19976, National Bureau of Economic Research, Inc.
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  15. Nora E. Gordon, 2013. "High School Graduation in the Context of Changing Elementary and Secondary Education Policy and Income Inequality: The Last Half Century," NBER Working Papers 19049, National Bureau of Economic Research, Inc.
  16. Richard J. Murnane, 2013. "U.S. High School Graduation Rates: Patterns and Explanations," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 370-422, June.
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