Executive Summary: "How did the Increase in Economic Inequality Between 1970 and 1990 Affect Children's Educational Attainment?" by Susan Mayer

Since the 1970s, household income for the poorest fifth of Americans has grown at a snail’s pace when compared with household income of the richest fifth.  At the same time, the gap in educational attainment between the wealthiest and poorest Americans has become more pronounced.  For example, in the early 80s, the percentage of children from the lowest and highest income quintile that attended post-secondary schools were 57 percent and 81 percent respectively.  By 1992, the percentage grew to 60 percent and 90 percent respectively.  In other words, where the achievement gap in the 80s numbered 24 points, by 1992 the gap expanded to 30 points. While a number of studies have focused on the causes of this expansion of inequality, few have considered the consequences of growing economic inequality, particularly for children’s educational attainment.

Previous research clusters around a few hypotheses on the effects of inequality on school achievement. Some argue that inequality is caused by the higher salaries which people with degrees can demand.  Due to higher returns, more people will choose to pursue advanced education, so overall rates of educational attainment should grow. Another hypothesis suggests that an increase in economic inequality will affect political support for redistributive public policy, like increased spending for education.  Assuming the wealthy make up a disproportionate segment of voters, support for redistributive policies may decrease as the wealthy choose to abandon public schools and send their children to private schools, causing educational attainment to plummet. On the other hand, inequality can increase support for redistribution, if voters think poverty causes crime and view education as a way to help eliminate poverty, causing school achievement to climb.

In her study, Mayer draws on data from the Panel Study of Income Dynamics (PSID) and the U.S. Census to estimate the effects of growth in economic inequality on school achievement, the achievement gap between rich and poor children, as well as in the way inequality is transmitted across generations. She culls data from 3000+ respondents ages 12-14 and organizes them based on their chances of becoming a high school graduate, entering college, and completing college.  Mayer controls for certain state characteristics like, the portion of African-American or Hispanic residents, mean household income, elementary and secondary public school expenditures per capita and college tuition for the in-state university.

Mayer’s results include the finding that growing inequality caused mean educational attainment to increase, since the gains of the wealthy students offset the losses of the poorer students. She also finds that inequality exacerbates the education gap between wealth and poverty extremes and increases the likelihood that poverty will be transmitted across generations.