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Schooling, Inequality, and the Impact of Government

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  • Eric A. Hanushek
  • Julie A. Somers

Abstract

Analyses of income inequality have identified the importance of increased demand for worker skills, but characterizations of worker skills by the amount of schooling attained do not capture important aspects of the widening income distribution and of the stagnating relative wages of black workers. This paper is motivated by the possibility that schooling quality is an important component of the changing income distribution. The central analysis focuses on how governmental schooling policies particularly those related to the level and distribution of school spending affect the distribution of worker quality and of income. The substantial differences in spending across states are not significantly related to the variations in achievement growth across states. Further, the three decade old movement toward reducing the variation in school spending within states appears to have done nothing to reduce subsequent income variations of workers. Thus, the direct government policies toward school spending, as carried out in the past, have not ameliorated inequalities in incomes.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7450.

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Date of creation: Dec 1999
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Publication status: published as Welch, Finis (ed.) The Causes and Consequences of Increasing Inequality. Chicago: University of Chicago Press, 2001
Handle: RePEc:nbr:nberwo:7450

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References

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  1. Eric A. Hanushek & Steven G. Rivkin & Lori L. Taylor, 1996. "Aggregation and the Estimated Effects of School Resources," NBER Working Papers 5548, National Bureau of Economic Research, Inc.
  2. Finis Welch, 1999. "In Defense of Inequality," American Economic Review, American Economic Association, American Economic Association, vol. 89(2), pages 1-17, May.
  3. Smith, James P & Welch, Finis R, 1989. "Black Economic Progress after Myrdal," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 27(2), pages 519-64, June.
  4. Michael A. Boozer & Alan B. Krueger & Shari Wolkon, 1992. "Race and School Quality Since Brown vs. Board of Education," NBER Working Papers 4109, National Bureau of Economic Research, Inc.
  5. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 30(3), pages 1333-81, September.
  6. Derek A. Neal & William R. Johnson, 1995. "The Role of Pre-Market Factors in Black-White Wage Differences," NBER Working Papers 5124, National Bureau of Economic Research, Inc.
  7. Murray, Sheila E & Evans, William N & Schwab, Robert M, 1998. "Education-Finance Reform and the Distribution of Education Resources," American Economic Review, American Economic Association, American Economic Association, vol. 88(4), pages 789-812, September.
  8. Downes, Thomas A., 1992. "Evaluating the Impact of School Finance Reform on the Provision of Public Education: The California Case," National Tax Journal, National Tax Association, vol. 45(4), pages 405-19, December.
  9. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(1), pages 1-40, February.
  10. Richard J. Murnane & John B. Willett & Frank Levy, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," NBER Working Papers 5076, National Bureau of Economic Research, Inc.
  11. Heckman, James & Layne-Farrar, Anne & Todd, Petra, 1996. "Human Capital Pricing Equations with an Application to Estimating the Effect of Schooling Quality on Earnings," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 562-610, November.
  12. O'Neill, June, 1990. "The Role of Human Capital in Earnings Differences between Black and White Men," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 4(4), pages 25-45, Fall.
  13. Jeff Grogger & Eric Eide, 1995. "Changes in College Skills and the Rise in the College Wage Premium," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 280-310.
  14. Cook, Michael D & Evans, William N, 2000. "Families or Schools? Explaining the Convergence in White and Black Academic Performance," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 18(4), pages 729-54, October.
  15. R. M. Hauser & M. H. Huang, . "Trends in Black-White Test-Score Differentials," Institute for Research on Poverty Discussion Papers, University of Wisconsin Institute for Research on Poverty 1110-96, University of Wisconsin Institute for Research on Poverty.
  16. James Heckman & Anne Layne-Farrar & Petra Todd, 1995. "Does Measured School Quality Really Matter? An Examination of the Earnings-Quality Relationship," NBER Working Papers 5274, National Bureau of Economic Research, Inc.
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Cited by:
  1. Reynaldo Fernandes & Amaury Patrick Gremaud & Gabriel Ulyssea, 2004. "Sistema Brasileiro De Financiamento À Educação Básica: Principais Características, Limitações E Alternativas," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of G 132, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  2. Pereira, Pedro Telhado & Martins, Pedro Silva, 2002. "Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries," Discussion Papers, The Research Institute of the Finnish Economy 709, The Research Institute of the Finnish Economy.
  3. Eric A. Hanushek & Margaret E. Raymond, 2004. "Does School Accountability Lead to Improved Student Performance?," NBER Working Papers 10591, National Bureau of Economic Research, Inc.
  4. Eric A. Hanushek, 2001. "Black-White Achievement Differences and Governmental Interventions," American Economic Review, American Economic Association, American Economic Association, vol. 91(2), pages 24-28, May.
  5. Pyastolov, S.M., 2007. "Norms as indicators of human capital investments effectiveness," MPRA Paper 44451, University Library of Munich, Germany.
  6. Mongan, Juan Carlos & Santin, Daniel & Valiño, Aurelia, 2011. "Towards the equality of educational opportunity in the province of Buenos Aires," Journal of Policy Modeling, Elsevier, Elsevier, vol. 33(4), pages 583-596, July.
  7. Thomas A. Downes, 2002. "Do state governments matter?: a review of the evidence on the impact on educational outcomes of the changing role of the states in the financing of public education," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, vol. 47(Jun), pages 143-180.
  8. Eric A. Hanushek & Margaret E. Raymond, 2002. "Improving educational quality: how best to evaluate our schools," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, vol. 47(Jun), pages 193-247.
  9. Kristen Harknett & Irwin Garfinkel & Jay Bainbridge & Timothy Smeeding & Nancy Folbre & Sara McLanahan, 2003. "Do Public Expenditures Improve Child Outcomes in the U.S.? A Comparison across Fifty States," Center for Policy Research Working Papers, Center for Policy Research, Maxwell School, Syracuse University 53, Center for Policy Research, Maxwell School, Syracuse University.

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