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

  • Melissa S. Kearney
  • Phillip B. Levine

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
Note: CH LS
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  1. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," NBER Working Papers 13527, National Bureau of Economic Research, Inc.
  2. James J. Heckman & Paul A. LaFontaine, 2010. "The American High School Graduation Rate: Trends and Levels," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 244-262, May.
  3. Tara Watson & Sara McLanahan, 2010. "Marriage Meets the Joneses: Relative Income, Identity, and Marital Status," Department of Economics Working Papers 2010-06, Department of Economics, Williams College.
  4. Garance Genicot & Debraj Ray, 2014. "Aspirations and Inequality," NBER Working Papers 19976, National Bureau of Economic Research, Inc.
  5. Susan E. Mayer, 2000. "How Did the Increase in Economic Inequality between 1970 and 1990 Affect American Children's Educational Attainment?," Working Papers 0002, Harris School of Public Policy Studies, University of Chicago.
  6. Robert Jensen, 2010. "The (Perceived) Returns to Education and the Demand for Schooling," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 515-548, May.
  7. Miles Corak, 2013. "Income Inequality, Equality of Opportunity, and Intergenerational Mobility," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 79-102, Summer.
  8. Sean Corcoran & William N. Evans, 2010. "Income Inequality, the Median Voter, and the Support for Public Education," NBER Working Papers 16097, National Bureau of Economic Research, Inc.
  9. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez & Nicholas Turner, 2014. "Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility," NBER Working Papers 19844, National Bureau of Economic Research, Inc.
  10. 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.
  11. 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 628-37, November.
  12. 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.
  13. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States," NBER Working Papers 19843, National Bureau of Economic Research, Inc.
  14. 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.
  15. 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.
  16. Case, A.C. & Katz, L.F., 1991. "The Company You Keep: The Effects Of Family And Neighborhood On Disadvantaged Younths," Harvard Institute of Economic Research Working Papers 1555, Harvard - Institute of Economic Research.
  17. Corak, Miles, 2006. "Do Poor Children Become Poor Adults? Lessons from a Cross Country Comparison of Generational Earnings Mobility," IZA Discussion Papers 1993, Institute for the Study of Labor (IZA).
  18. N. Gregory Mankiw, 2013. "Defending the One Percent," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 21-34, Summer.
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