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Equalizing Opportunity for Racial and Socioeconomic Groups in the United States Through Educational Finance Reform

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  • Betts, Julian
  • Roemer, John E.

Abstract

We analyze the reallocations of educational expenditures required to equalize opportunities (taken to be wage income), according to the theory of Roemer (1998). Using the NLSYM data set, we find that implementing an equal-opportunity policy across men of different races, by using educational finance as the instrument, and ensuring that no race received less than the average observed nationally, would require spending nine times as much on black students, per capita, as on white students. Even the lower bound of bootstrapped confidence intervals for the policy estimates suggests large reallocations between races. The equal-opportunity policy across men from different socio-economic backgrounds that ignores race does almost nothing to equalize wages across races. For inter-racial allocations, we find evidence of a tradeoff between equity and total product, with reallocation lowering the wage bill by about 5%. In contrast, for reallocations based on parental education, equalization increases the wage bill by about 2% because the impact of school spending appears to be slightly higher for those with less highly educated parents.

Suggested Citation

  • Betts, Julian & Roemer, John E., 2005. "Equalizing Opportunity for Racial and Socioeconomic Groups in the United States Through Educational Finance Reform," University of California at San Diego, Economics Working Paper Series qt0gq4z4m9, Department of Economics, UC San Diego.
  • Handle: RePEc:cdl:ucsdec:qt0gq4z4m9
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    References listed on IDEAS

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    1. David Card & Alan B. Krueger, 1996. "Labor Market Effects of School Quality: Theory and Evidence," NBER Working Papers 5450, National Bureau of Economic Research, Inc.
    2. repec:fth:prinin:357 is not listed on IDEAS
    3. Grogger, Jeff, 1996. "School Expenditures and Post-schooling Earnings: Evidence from High School and Beyond," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 628-637, November.
    4. Betts, Julian R, 1995. "Does School Quality Matter? Evidence from the National Longitudinal Survey of Youth," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 231-250, May.
    5. David Card & Alan Krueger, 1996. "Labor Market Effects of School Quality: Theory and Evidence," Working Papers 736, Princeton University, Department of Economics, Industrial Relations Section..
    6. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Genes & the left
      by chris in Stumbling and Mumbling on 2018-01-16 19:35:08

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    Cited by:

    1. Erik Figueiredo & José Silva Netto Junior, 2014. "More equal but not so fair: an analysis of Brazilian income distribution from 1995 to 2009," Empirical Economics, Springer, vol. 46(4), pages 1325-1337, June.
    2. Annegues, Ana Claudia & Figueiredo, Erik Alencar de & Souza, Wallace Patrick Santos de Farias, 2015. "Determinants of unfair inequality in Brazil, 1995 and 2009," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.

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