Researchers link inequality to high school dropout rates

In a new Brookings Institute paper, two scholars use empirical data to establish a causal relationship between income inequality and graduation rates. 

First Look

Social scientists have long pointed to economic inequality as a prognosis for lowered social mobility, given the rate that students from low-income communities drop out of high school. But until now, researchers have been unable to establish the mechanisms that drive that correlation.

A new paper presented by the Brookings Institute Thursday ties income inequality to reduced rates of upward mobility using empirical data, specifically examining the role of students’ perception of their potential future success in affecting their actual success.

Titled “Income Inequality, Social Mobility, and the Decision to Drop Out Of High School,” the research by Brookings fellow and University of Maryland economics professor Melissa Kearney and Wellesley economics professor Phillip Levine debunks the common economic conception that inequality inspires those in the lower-income brackets to try harder in achieving upward mobility.

Instead, Ms. Kearney and Mr. Levine found that low-income youths who are exposed to considerable socioeconomic gaps are likely to view middle-class life as unattainable, resulting in a detachment from their futures.

“To empirically explore this idea, we investigate whether places characterized by higher rates of income inequality lead to lower rates of high school graduation among individuals from low-[socioeconomic status, or SES] families, controlling for individual and family demographics and broader contextual factors,” the authors write in the study.

By comparing low-income students who go to school with middle class students with low-income students whose classmates are in the same socioeconomic bracket, the researchers show that the former group – those more exposed to inequality – are considerably more likely to drop out of high school.

For instance, at least 25 percent of students who attend school in higher inequality states such as Louisiana, Mississippi, Georgia, and the District Columbia don’t end up graduating in a four-year period, compared to the 10 percent of students in the lower-inequality states of Vermont, Wisconsin, North Dakota, and Nebraska. The scholars go on to show that low-income youth – especially boys – are more than four percent more likely to drop out of high school by age 20 if they live in a high-inequality community.

Why is this the case? Kearney and Levine suggest that teens, like everyone else, make decisions based on their perceived returns of investment in completing high school. If they perceive that the ladder between their socioeconomic position and the middle class is insurmountable, then they lose hope for eventual success. They coin this disposition as “economic despair.”

"Income inequality can negatively affect the perceived returns to investment in education from the perspective of an economically disadvantaged adolescent,” they write. “Perceptions beget perceptions."

While their findings reflect a pessimistic view of social mobility, they have important implications for future education policy.

“For example, interventions might take the form of mentoring programs that connect youth with successful adult mentors and school and community programs that focus on establishing high expectations and providing pathways to graduation,” the authors write. “They could also take the form of early-childhood parenting programs that work with parents to create more nurturing home environments to build self-esteem and engender positive behaviors."