Inequality undermines the value of education for the poor (2024)

Commentary

Melissa S. Kearney and

Melissa S. Kearney Nonresident Senior Fellow - Economic Studies, Center for Economic Security and Opportunity, The Hamilton Project

Phillip Levine

Phillip Levine Nonresident Senior Fellow - Economic Studies, Center for Economic Security and Opportunity

March 16, 2016

Inequality undermines the value of education for the poor (3)
  • 3 min read

High school dropout rates are higher in cities and states with greater income inequality. This does not just reflect the different demographics across places. As we document in our forthcoming contribution to the Brookings Papers on Economic Activity, children from lower socio-economic backgrounds are more likely to drop out if they live in a more unequal city or state. The question is: why? Perhaps children from lower socio-economic backgrounds perceive a lower return to staying enrolled in school. They might be correct.

Unequal places, unequal returns to schooling

Brad Hershbein’s recent blog (“A college degree is worth less if you are raised poor”) shows that gains to post-secondary education are lower for those from poorer backgrounds. Our own work points to an additional factor: inequality. Places with greater “lower-tail inequality” (the ratio of income at the 50th percentile of the income distribution to the 10th percentile) show the lowest wage gains to education for those from low-SES backgrounds.

Using data from the 1979 National Longitudinal Survey of Youth, we examine outcomes for children from three socio-economic categories, based on their mother’s level of education (no high school diploma, high school graduate, any college). Specifically, we measure the percentage wage increase associated with each additional year of school. We also compare results in states with low, high and medium levels of lower-tail income inequality. On average, an extra year of school is associated with a 10 percent higher wage. This is consistent with the broader research literature on the causal impact of education on earnings. But there is striking variation between states with different levels of income inequality:

In the more equal states, the wage gains associated with education vary only slightly by SES background. But there are big class gaps in the mid-range and high inequality states. In more unequal states, children from low-SES households see much lower rewards, in terms of wages, from each additional year of education. (An interactive map showing inequality rankings, along with dropout rates is available here.)

How might inequality impact returns to education?

This pattern has a number of possible explanations. Perhaps in more unequal states, schools attended by low-SES children are particularly weak, whereas in more equal states school quality is less varied. In unequal states, poor children might live in very isolated, segregated neighborhoods. Or perhaps there are simply fewer decently-paying jobs for high school graduates in less equal places, which low-SES young people struggle to secure. A better understanding of the complex relationships between inequality, dropout rates, and returns to education may help to address the broader challenge of reducing class gaps, and promoting upward mobility.

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Authors

Melissa S. Kearney Nonresident Senior Fellow - Economic Studies, Center for Economic Security and Opportunity, The Hamilton Project @kearney_melissa

Phillip Levine Nonresident Senior Fellow - Economic Studies, Center for Economic Security and Opportunity @phil_wellesley

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FAQs

How does inequality affect education? ›

Income inequality and inequality in education often go hand in hand. Students who live in lower-income areas may have limited access to quality education. And, statistically, those from lower-income families are less likely to pursue higher education.

What is the quote about inequality in education? ›

Until we get equality in education, we won't have an equal society.

How does income inequality affect the lower class? ›

Financial hardship for many, persistent poverty, and a dispirited populace that could be ripe for social and political unrest are just a few of the effects of income inequality.

What is the difference between inequity and inequality in education? ›

The difference between inequity and inequality might seem small but really make a world of a difference. Inequality means people aren't given the same resources, treatment, or opportunities. Inequity is inequality in respect to needs.

How does poverty affect education? ›

These factors often place more stress on a student, which can negatively impact the student's ability to succeed in a school. Students living in poverty often have fewer resources at home to complete homework, study, or engage in activities that helps equip them for success during the school day.

How does social class affect education? ›

Statistically, pupils with a better social class background are more likely to have greater educational achievement. There are many aspects of someone's class which contribute to their educational achievements, such as class values, hobbies and culture.

What are examples of racial inequality in education? ›

Black and Latino students represent 38 percent of students in schools that offer AP courses, but only 29 percent of students enrolled in at least one AP course. Black and Latino students also have less access to gifted and talented education programs than white students.

What is a good quote about inequality? ›

4. “As long as poverty, injustice, and gross inequality persist in our world, none of us can truly rest.” – in London's Trafalgar Square in 2005. 5. “It is in your hands to create a better world for all who live in it.”

What factors contribute to inequality within the educational system? ›

Disparities in academic access among students in the United States are the result of multiple factors including government policies, school choice, family wealth, parenting style, implicit bias towards students' race or ethnicity, and the resources available to students and their schools.

How does inequality affect the poor? ›

Inequalities of opportunity affect a person's life expectancy and access to basic services such as healthcare, education, water, and sanitation. They can curtail a person's human rights, through discrimination, abuse and lack of access to justice.

What is the relationship between poverty and inequality? ›

People tend to treat those that they believe have money differently than those they believe to be poor. Poverty leads to inequality, because it presents the person that is poor with a scenario that they often feel there is no way out of. It leads those with money to feel that they are superior to those that are poor.

What are the consequences of inequality? ›

Inequality is a complex concept and is difficult to measure. Excessive inequality can erode social cohesion, lead to political polarization, and lower economic growth.

What are examples of inequalities in education? ›

One example of educational inequality is a student of Hispanic descent being placed in lower-level classes due to race. Another example is a female student being encouraged to take a cooking class instead of a car repair class due to the car repair class being full of male students.

What causes educational inequality? ›

Unequal educational outcomes are attributed to several variables, including family of origin, gender, and social class. Achievement, earnings, health status, and political participation also contribute to educational inequality within the United States and other countries.

What is an example of equality vs equity in education? ›

For example, equality in education funding would mean providing all school districts with the same funding regardless of its geographic location. On the other hand, equity funding would mean determining which areas are underserved and providing additional funding to facilitate more robust operations.

What factors contribute to inequality within the education system? ›

Disparities in academic access among students in the United States are the result of multiple factors including government policies, school choice, family wealth, parenting style, implicit bias towards students' race or ethnicity, and the resources available to students and their schools.

How does discrimination affect education? ›

Experiencing discrimination can provoke stress responses similar to post-traumatic stress disorder. Children who experience discrimination from their teachers are more likely to have negative attitudes about school and lower academic motivation and performance, and are at increased risk of dropping out of high school.

How does socioeconomic status affect education? ›

The most common problems with children with a low socioeconomic background are low attendance, irregularity, and dropout in-between the academic session. As these parents are not well educated, they are unable to help their children in their studies.

What are some educational barriers faced by individuals related to race or ethnicity? ›

Educational barriers related to race include systemic issues such as discrimination in housing, covert discrimination, and employer discrimination that lead to lower educational attainment among certain racial and ethnic groups. Historical bias and prejudices also play a significant role in exacerbating these barriers.

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