How Income Inequality Might Lead Students to Drop Out of High School

A blog about business and economics.
June 16 2014 2:12 PM

How Income Inequality Might Lead Students to Drop Out of High School

81648324MT005_later
In states like Louisiana with large gaps between the the poorest households and middle earners, students are less likely to graduate high school. Above, a school bus in New Orleans.

Photo by Mario Tama/Getty Images

A couple of years ago, economists Melissa Kearney and Phillip Levine came up with a simple and striking explanation of teen pregnancy they called the “economic despair” theory. Unmarried girls from poor families, they found, were more likely to give birth in states with large income gaps between the poorest households and the middle class—what researchers call “lower-tail” inequality. Combined with other evidence, such as ethnographic research, this pattern led them to conclude that many young women simply choose to have children early once they feel their career prospects are dim. They look at the economic ladder and decide the climb is impossible. So they look for personal fulfillment through a baby instead.

Jordan Weissmann Jordan Weissmann

Jordan Weissmann is Slate's senior business and economics correspondent.

Today, Kearney and Levine are out with a new working paper that shows how the “despair theory” might apply to young men. This time, the issue is high school graduation. It finds that boys from low-socioeconomic-status families are more likely to drop out in states with larger gaps between the poor and the middle class, as shown on the far left of the graph below. That trend holds even once they control for things that might influence completion, such as racial segregation or public investment in schools.

Advertisement

On the whole, state graduation rates seem to fall as lower-tail inequality rises. Similarly, states with worse income mobility also had lower graduation rates among the poor.

Like teen girls who give birth, Kearney and Levine suggest that when boys see middle-class life as a distant possibility, they become discouraged and give up on school. While a little bit of inequality might motivate some students to study harder, a lot of it might kill their motivation entirely. Or, as the researchers put it a bit more technically, “a greater gap between the bottom and the middle of the income distribution might lead to a heightened sense of economic marginalization such that an adolescent at the bottom of the income distribution does not see much value in investing in his/her human capital.”

Kearney and Levine aren't offering definitive proof that "economic despair" is driving down graduation rates, nor do they claim to. Rather, they're offering a compelling explanation for a phenomenon that doesn't seem to be explained especially well by other data, and one that fits pretty well with common sense.

In general, there are two reasons why this study is intriguing. First, social scientists are only beginning to grapple with the ways that inequality shapes countries economically and socially. Since education is often offered up as a potential solution to the income gap, it should be of some concern that graduation could be one of the income gap's first victims.

Beyond that, Kearney and Levine raise a bigger point about the way we conceive of the income gap. Much of the inequality debate has focused on the growing divide between the rich and the rest, because that's been the major development of the past 30 years. By comparison, the gulf between the poor and middle has basically been stable—yet it’s that gap that might have some of the most malign effects on society. When we talk about if and how inequality is bad for the country, we have to remember which type of inequality we're talking about.

Jordan Weissmann is Slate's senior business and economics correspondent.

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Congress’ Public Shaming of the Secret Service Was Political Grandstanding at Its Best

Michigan’s Tradition of Football “Toughness” Needs to Go—Starting With Coach Hoke

A Plentiful, Renewable Resource That America Keeps Overlooking

Animal manure.

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Politics

Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Hasbro Is Cracking Down on Scrabble Players Who Turn Its Official Word List Into Popular Apps

Florida State’s New President Is Underqualified and Mistrusted. He Just Might Save the University.

  News & Politics
Politics
Sept. 30 2014 9:33 PM Political Theater With a Purpose Darrell Issa’s public shaming of the head of the Secret Service was congressional grandstanding at its best.
  Business
Moneybox
Sept. 30 2014 7:02 PM At Long Last, eBay Sets PayPal Free
  Life
Gaming
Sept. 30 2014 7:35 PM Who Owns Scrabble’s Word List? Hasbro says the list of playable words belongs to the company. Players beg to differ.
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Sept. 30 2014 3:21 PM Meet Jordan Weissmann Five questions with Slate’s senior business and economics correspondent.
  Arts
Brow Beat
Sept. 30 2014 8:54 PM Bette Davis Talks Gender Roles in a Delightful, Animated Interview From 1963
  Technology
Future Tense
Sept. 30 2014 7:00 PM There’s Going to Be a Live-Action Tetris Movie for Some Reason
  Health & Science
Medical Examiner
Sept. 30 2014 11:51 PM Should You Freeze Your Eggs? An egg freezing party is not a great place to find answers to this or other questions.
  Sports
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.