IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

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

  • Melissa S. Kearney
  • Phillip B. Levine

It is widely documented that places with higher levels of income inequality have lower rates of social mobility. But it is an open question as to whether this reflects a causal relationship. We propose that one channel by which higher rates of income inequality might lead to lower rates of upward mobility is through lower rates of human capital investment among low-income individuals. Specifically, we posit that greater levels of income inequality could lead low-income youth to perceive a lower return to investment in their own human capital. Such an effect would offset any potential “aspirational” effect coming from higher educational wage premiums. The data are consistent with this prediction: low-income youth are more likely to drop out of school if they live in a place with a greater gap between the bottom and middle of the income distribution. This finding is robust to a number of specification checks and tests for confounding factors. This analysis offers an explanation for how income inequality might lead to a perpetuation of economic disadvantage and has implications for the types of interventions and programs that would effectively promote upward mobility among low-SES youth.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.nber.org/papers/w20195.pdf
Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

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

as
in new window

Length:
Date of creation: Jun 2014
Date of revision:
Handle: RePEc:nbr:nberwo:20195
Note: CH LS
Contact details of provider: Postal:
National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.

Phone: 617-868-3900
Web page: http://www.nber.org
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
  2. 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," American Economic Review, American Economic Association, vol. 104(5), pages 141-47, May.
  3. 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.
  4. Heckman, James J. & LaFontaine, Paul A., 2007. "The American High School Graduation Rate: Trends and Levels," IZA Discussion Papers 3216, Institute for the Study of Labor (IZA).
  5. 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.
  6. Jeffrey R. Kling & Jens Ludwig & Lawrence F. Katz, 2005. "Neighborhood Effects on Crime for Female and Male Youth: Evidence from a Randomized Housing Voucher Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 120(1), pages 87-130.
  7. 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.
  8. Tara Watson & Sara McLanahan, 2009. "Marriage Meets the Joneses: Relative Income, Identity, and Marital Status," NBER Working Papers 14773, National Bureau of Economic Research, Inc.
  9. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Working Papers 2011-037, Human Capital and Economic Opportunity Working Group.
  10. Richard J. Murnane, 2013. "U.S High School Graduation Rates: Patterns and Explanations," NBER Working Papers 18701, 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. 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.
  13. 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.
  14. N. Gregory Mankiw, 2013. "Defending the One Percent," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 21-34, Summer.
  15. 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.
  16. 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).
  17. 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.
  18. Tara Watson, 2009. "Inequality And The Measurement Of Residential Segregation By Income In American Neighborhoods," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 820-844, 09.
  19. Robert Jensen, 2010. "The (Perceived) Returns to Education and the Demand for Schooling," The Quarterly Journal of Economics, Oxford University Press, vol. 125(2), pages 515-548.
  20. Garance Genicot & Debraj Ray, 2014. "Aspirations and Inequality," NBER Working Papers 19976, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:20195. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.