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

Source: Melissa S. Kearney, Phillip B. Levine, National Bureau of Economic Research (NBER), NBER Working Paper No. 20195, June 2014
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From the 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.
Related:
Income Inequality and Early Nonmarital Childbearing
Source: Melissa S. Kearney, Phillip B. Levine, Journal of Human Resources, Vol. 49 no. 1, Winter 2014
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From the abstract:
Using individual-level data from the United States, we empirically investigate the role of lower-tail income inequality in determining rates of early nonmarital childbearing among low socioeconomic status (SES) women. We present robust evidence that young low-SES women are more likely to have a nonmarital birth when they live in places with larger lowertail income inequality, all else held constant. We calculate that differences in the level of inequality are able to explain a sizeable share of the geographic variation in teen fertility rates. We propose a model of adolescent decisionmaking that facilitates the interpretation of our results.