5

Inequality in students’ education and educational attainment nationally has been a policy issue throughout modern political history in the US. Starting from a child’s birth, research indicates their level of educational attainment is affected by several metrics, including their parent’s income level and the school district location of the elementary and secondary education (K-12th grade) schools they will attend throughout their childhood. Differentials in an individual’s future wages can be affected at all stages of that individual’s education. While in adolescence, the socioeconomic factors of an individual greatly affect that individual’s future educational attainment and future wages. These same factors also greatly affect an individual’s post-secondary education (college), including whether they even attend college. Similarly, once in a career, that individual’s professional education and on-the-job training also affect their wages and potential income. These inequalities in educational attainment throughout a person’s life largely derive from those socioeconomic factors affecting an individual and their family at their birth. In modern politics today, a national spotlight has been shined on issues of educational inequality, causing several policies with the intent of decreasing these inequalities to be proposed and implemented throughout recent decades, some more effective than others. This chapter will also examine “Gains and Gaps: Changing Inequality in U.S. College Entry and Completion”, a National Bureau of Economic Research (NBER) paper by Martha J. Bailey and Susan M. Dynarski, studying inequality in postsecondary educational attainment in the US over more than a thirty-year timespan.

Adolescence

There are a variety of factors introduced within adolescence that play a role in shaping the experience that people come to expect from life which inspires educational aspirations and leads to income variations later in life. Childhood experiences provide a background for expected inequality throughout the rest of someone’s life and also influence the decisions made during adolescence that affect the future inequalities that an individual faces throughout a lifetime. As the factors come into play, students within low-income areas tend to receive worse education opportunities and fewer chances for further educational attainment, affecting future income.

When it comes to parental influences over a children’s schooling, influences can be found in a two-parent family structure and the age of the mother at the time of the birth of the eldest child. Duncan, Kalil, and Ziol (2017) studied these factors in order to determine how large of an affect family structure and age of birth mother at the time of the first child may have on future schooling. The two-parent family structure did not play as large of a role as expected, however the stability offered through this situation generally provides a stronger background for children to build off of in order to continue onward with academic success. A stable family life encourages children to strive to obtain a similar life in the future and drives them to work to maintain it, which traditionally manifests itself within the academic sphere during adolescent years.. As for the age at which the mother gave birth to the first child, this tends to be a large factor in determining inequality. Duncan, Kalil, and Ziol (2017) comment that this was a surprisingly large factor when it came to determining future schooling and income as those who came from young mothers tended to start in a lower bracket and remain there throughout their life as they follow the example offered by their maternal figure. It is also difficult for young mother’s to advance beyond the lower brackets due to stigma and the difficulty in receiving an education while also rearing children. Having a mother who is financially stable going into pregnancy and childhood provides the life experience that can lead a child to a more successful life and allow them to avoid certain inequalities that younger mothers often face.

Included within the family structure is the conversation surrounding birth order and family size, something that is rather up to debate, and that most experts agree requires further investigation. Kessler conducted a study on the topic and came to the conclusion that the resources that are allocated to specific children influences achievement, which meant that large families were unable to place as much focus on and as many materials in the hands of each child. Without access to the same level of resources or time, a child will likely end up behind others within their class who come from smaller families within the same income bracket. For women specifically, family size has an effect on future employment as those who are from larger families tend to work less, both when younger (14-22) and older (22-30), as they receive heavy influence regarding childbearing behavior. However, neither the birth order or family size influences future wages or the growth rate of said wages overall. While access to these resources is always beneficial, it can be overcome if the individual is willing to put forth the effort. As for birth order specifically, most studies are inconclusive and determine that there is likely no statistical significance to be found. Kessler does note that lack of birth order can be affected by competing for influence over the tendency of parents to favor both the low birth orders and high birth orders. With this, those that fall within these two groups would go unnoticed and end up hidden by the results of the two bookends of the data.

Economic segregation creates a division of overall educational attainment between high income and low-income children in that the influences within the area and overall opportunities offered allow high-income students to reach for and assume excess to further education. Mayer (2002) does note that no overall effect can be determined due to the increase in high-income students canceling out the reduction within low-income students, which can be deceiving and clouds the results. Inequality should be determined between mean neighborhood income and not income between neighbors within the same neighborhood as there tends to be overall segregation between neighborhoods and those within the same area will tend to operate on the same level of wealth. This is exceptionally noticeable as the rich tend to segregate themselves as they obtain wealth in order to place themselves within better school districts, providing an environment in which their children will be pushed to obtain a higher level of education and opportunities such as college won’t be questioned but rather expected. As this continues, the segregation created within one generation will continue on throughout further generations as their children are given a foot up within the race.

Within the segregation of the school districts, there becomes an issue with how financing tends to offer an upper hand to the school districts who receive larger amounts of money. Card and Payne (1998) reviewed data following court decisions that stated that a state’s financing system was unconstitutional and required a substantial change to the system, leading to them to respond by offering improved funding to schools that are in need. This situation offers better funding to low-income districts that are then able to take the funding and turn it around to purchase necessary materials as spending increased 30-65 cents per dollar of state aid received. However, the effect of this spending was not reflected in the SAT scores of low income students, with only a small change resulting from the increased funding. According to Card and Payne, the rulings with 12 states only offered a 5 percent decrease in the SAT score gap within the 1980s. This doesn’t mean that the increase in funding is not required, it may come to be that the schools are still significantly far behind financially and what is received is not enough to fix this issue, but also leads into the underlying issues that cannot be overcome by funding the school itself and are much more fundamental to the life the low income students lead outside of the school.

When it comes down to SAT scores in general, high-income students outscore low-income students in every section of the test. According to calculations done by the National Center for Fair & Open Testing, using data provided by the College Board, it can be determined that students from the wealthiest families managed to achieve scores of almost 400 points higher than those from low-income families. Zumbrun dispels the idea that this disparity comes from the ability to access test prep, which has been determined to raise scores minimally and not to the level needed to fill the gap. The various factors that come into play create an environment in which education can be the main focus of the lives of high-income students while low-income students lead more difficult lives outside of school, drawing their attention to assisting parents through after school jobs, housework, or babysitting of siblings. If the discussion focuses primarily on the reading section of the SAT, cultural bias comes into effect as those within more affluent areas, Zumbrun offers New England as a center for this, find that they are exposed to language that is more likely to appear on the SAT. This has been confronted by the College Board, however, the effect will remain in place as long as there continues to be a gatekeeping aspect surrounding language and literature. There is also the understanding between those in high-income families that their parents needed to achieve high scores on the tests and obtain a prestigious college degree in order to build the wealth that the family is accustomed to, meaning that the children are encouraged to maintain this in order to achieve the same lifestyle in the future. With this, those who have experienced the importance of performing well on the SAT will likely reach the income level to move to areas with better schools or pay for their children to attend private schools which provide a teaching style that works toward students eventually applying for and attending high ranked universities. However, Zumbrun does end the article with the understanding that parental income does not guarantee that a student will achieve a high score on the test as motivation of the student as well as ability will come into play in the end.

Sometimes students who elected to drop out of high school will choose to return in order to obtain a GED in the future. Murnane, Willet, and Tyler (2000) performed a study that surrounded the idea of who benefits from this decision. This study focused on male participants during the early 1990s at the age 27 who came from less-advantaged families with low academic skill levels when they were sophomores in high school. The goal of a GED is to correct the low academic skill levels and become marketable to an increased number of employers. GED recipients earned somewhat more than permanent dropouts but years of work experience has to be controlled within the experiment in order to be viewed as statistically significant. If the dropout being compared has obtained a low level of education at the sophomore level, they would be considered to be the least desirable when applying for jobs and would provide the GED receiver with an increased probability of employment. The achievement of a GED after dropping out shows an improved work ethic and signals to employees that the individual is now looking for serious employment. Those who drop out but have managed to obtain high skills throughout their time in high school, achieving a GED will have little to no effect on their employment and income, with those in the upper three-quarters of test scores finding that a GED is not an equivalent to them completing a conventional high school degree. Murnane, Willett, and Tyler also noted that all levels benefit from continued secondary education.

College

Research regarding college education to wage differentials has been widely studied for the United States. Due to technological advancement, the significance of college education has been increasing. Skills that can be acquired in college education such as critical and logical thinking are essentials to the highly competitive global labor market. Lifetime earnings between college graduates and high school graduates are significant and the gap has been increasing. This is because the return on higher education has been significantly increasing in the last decades. There is a significant wage gap between workers with college degrees and high school graduate workers. This difference is called the college wage premium. There are two theories for the source of the college wage premium: the productivity enhancement explanation, and the ability signaling explanation that the productivity enhancement theory postulates that college education increases wages by directly increasing the worker’s productivity (Becker 50-54).

Moreover, the central difference between high school and college graduates correlates to their productivity among their work. In human capital theory, education contributes to economic growth directly by increasing the productivity of a worker. This provides evidence to the theory of productivity enhancement, the higher the education produces more productivity. The ability signaling theory postulates that the college wage premium arises because, by acquiring a college education, a worker signals to firms that the individual has a higher innate ability than a high school graduate. Thus showing the level of schooling is directly affecting the chances for the individuals to get a better college premium. Higher education gives the individual more private and social returns (Fang, pg.1151).

Students who graduate from highly selective colleges earn significantly more than students who graduate from less-selective colleges (Monks, pg.279-289). Attending highly selective colleges provide students with powerful social networks that can increase their career opportunities in addition to a high quality of education. Although the selection requirements are extremely tough, the income returns on highly selective colleges are significantly higher. Moreover, studies find that there is a strong correlation between net family income and the quality of the college. The large proportion of students attending highly selective colleges are from relatively wealthy families. Since they have family connections, they have a better platform finding a better workplace where the high wage is almost guaranteed. Although there is much evidence showing the correlation between higher income and higher selective colleges, it can only be stated as graduates with a higher selective college will have a higher chance of collecting more income during their early careers, rather than the entire (Thomas; Zhang pg.437–459). Wage difference due to the quality difference of the institution attended might exist in early careers, the head start on the income in the early career could lead to a larger wage differential in the long term (Thomas; Zhang pg.437–459).

Attending college has become more mainstream as the demand for high skilled workers has risen over the years. However, attending college is an expensive investment. For most families in America, the cost of a college degree is a significant financial stressor and could be the most expensive investment many Americans ever make. For students who are not from a relatively wealthy family, attending college or not is one of the most critical decisions that can change their entire career. Although the number of students with loans has been increasing in recent years, support from parents is a significant factor that can affect students’ decisions as well. Unskilled workers choose higher fertility but spend less time and income on a child’s education than a skilled worker (Fan, pg. 908-922). This means that students with parents whose job is relatively unskilled have less financial support from their education. Since the financial burden is a significant factor that affects students’ decisions, whether they go to college or not, having less financial support from their parents can decrease their incentive to go to college. Conversely, a skilled worker has fewer children but invests a more significant fraction of income and time in the education of each child than an unskilled worker (Fan, pg.922-925). Students with parents whose job is relatively skilled have a less financial burden, and a better opportunity to go to a higher quality college, which can lead to higher wages in the future.

The financial burden is one of the problems that many students face when pursuing higher education. Offering students additional grant aid increases the odds of bachelor’s degree attainment over four years (Goldrick-Rab, pg. 1763-1768). By offering an additional grant, students can decrease their financial responsibilities and increase the motivation to complete higher education, which will result in a higher income compared to the ones who did not complete higher education. Although it is hard to close the wage gap between students who are from relatively rich and low-income families, as students who receive grants in college increase, the number of students who pursue a college education should increase, which will lead to a decrease in wage difference in the long term. Before the grant program was established, students who finish their programs on time are scarce, and the main reason was due to their financial issues.

As discussed in the previous section, financial support is one of the significant factors that can affect the undergraduate enrollment rate, especially for students who are from low-income families, which can result in wage differences. The hypothesis that will be tested in this section is that the increase in financial support, particularly the federal pell grant, for students from low-income families will increase the undergraduate enrollment.

In the last decades, financial support that is available to students who are from low-income families has significantly increased. Their purpose is to increase the incentive to approach higher education and decrease income inequality. Federal pell grants are one of the financial support provided by the U.S. federal government for students with financial needs. Students get paid at least once per term, depending on the school system. Grant amounts are depending on the student’s expected family contribution, the cost of attendance; the student’s enrollment status; and whether the student attends for a full academic year or less (U.S. Department of Education). One of the distinguishing differences from other financial support is that it does not need to be repaid. Therefore, there is no financial burden for students after they graduate. Due to this fact, the number of recipients who can receive the federal pell grant is limited. However, the total number of recipients who have received the grant has increased since 2000 as the government budget for the federal pell grants increased in the last decades. According to the U.S. Department of Education, the total recipients who have received the federal pell grants have increased by almost 3 million students in the last 20 years. Along with the increase in the government budget for the federal pell grants, the maximum awarded amount for students has dramatically increased from $3,750 to $5,920.

According to the U.S. Department of Education (2019), the proportion of undergraduate students who are from a low and very low-income family, between 50 and 100 percent of the federal poverty level and below 50 percent of the federal poverty level, has increased by 12% from the year between 2007-2008 and 2015-2016. This indicates that the number of students who take advantage of financial support provided by institutions such as federal institutions and schools has increased. Since students who are eligible to receive those financial supports have less financial strain, it increases their incentives to pursue higher education. The results from the U.S. Department of Education indicates that there is a correlation between the number of undergraduate students who are from relatively low-income families and the federal pell grants, which support the hypothesis. This finding suggests that there can be a smaller gap in the educational level between students from low-income families and middle and high-income families. Since college education is one of the significant factors that affect lifetime income, the increase in college enrollment from low-income families can lead to a smaller gap in income inequality caused by education level. Grants that only cover a small portion of the total tuition are not enough for students to complete their academics (Anderson, pg.148–157). Although providing grants increases students’ incentives to pursue higher education, larger amounts of grants for low-income students are required in order to reduce the gap.

Human Capital Accumulation and Non-Traditional Education

A typical male worker will hold seven jobs during their first ten years in the labor market (Felli; Harris, pg.586, 2018). High mobility of workers in the modern economy allows workers to continue their education after their primary and secondary education, in order to gain a comparative advantage to their peers in the form of human capital. Modern economic thinking on the topic of non-traditional education, which in the most general sense, is split into two categories or types, firm-specific skills training, and general skills training. Firm-specific skills training increases productivity for a specific firm. In contrast, general skills training provides a worker with additional skills that can translate to more than one firm. The modern economy, in which there is high worker mobility, causes workers to be in constant competition with each other for higher wages. In order to achieve higher wages, workers must increase their human capital, even after finishing traditional education such as high-school and college. This presents the question: does receive specific versus general training cause a difference in the wages of workers?

Human capital is an intangible collection of skills earned by workers’ investment in themselves to increase their wage-earning potential through increased productivity. Alternatively, in the case of specific training, it may be a firm’s investment in a worker to increase worker-productivity in a specific firm. In today’s economy, traditional schooling, high-school, secondary and postsecondary school, is thought of as the main contributor to human capital. Non-traditional training such as part-time college, trade school, online learning, certifications, and firm training also contribute significantly to workers’ human capital over their working-lifetime and in some fields of work make up a significant portion of workers’ human capital.

Specific training is an excessively firm-oriented type of training because it provides workers with productivity increases that only translates to improving a single firm’s productivity. Since it only translates to improving that firm’s productivity and will not transfer to other firms, specific training only increases workers’ human capital at the firm that is providing training because of this, specific training does not always translate to higher wages for the workers. As a result of non-transferable human capital, specific training may also decrease worker mobility in an economy because moving firms will decrease human capital. Although specific training decreases worker mobility, Becker argues that it also increases the retainability of a worker because firms must consider that already trained workers will be more productive than new workers and replacing the already trained worker will incur a training cost, as well as a loss in productivity(Becker, pg.28,1962).

In contrast, general training allows workers to transfer their training to multiple other occupations or firms, raising their human capital higher than specific training would. Becker argues that because general training raises workers’ wages equal to the increased level of productivity, that they will not be willing to pay for it (Becker pg.17,1962). Although firms are not willing to pay for general training, workers generally are. This is because by acquiring general training workers get skills that can be used by many different firms.

Although workers have to incur the upfront costs of acquiring general training, it is more beneficial for them in comparison to specific training. General training provides significantly more to workers in terms of potential future wages. This is not to say that specific training does not increase potential wages, but because workers who receive specific training cannot transfer their training it causes their wage-earning potential to be lower.

There is a case to be made that workers who stay at one firm for their whole career would be missing out on potential higher earnings from pursuing general training and job-hopping. By staying at a single firm workers wages can stagnate compared to the wages of their peers who change firms occasionally. Changing jobs occasionally and acquiring general training allows workers to increase their wages more than workers who stay at a single firm and only acquire specific training.

Policies

Many policies have been enacted by the US government to decrease the gap of educational attainment within US schools and between US students. Modern policies have focused on this gap and the purpose of this focus has changed through different enacted policies and acts made by different US presidents. The focus on educational attainment gaps involves modern policy changes beginning in the early 2000s (McGuinn 392). Starting with the No Child Left Behind (NCLB) Act of 2002, enacted by President Bush, to the reenactment of Elementary and Secondary Education Act (ESEA) policies by President Obama through the Every Student Succeeds Act (ESSA) of 2015, educational policy in the US has changed from a federally controlled, test-based program to more state-run, improvement-based guidelines. Both NCLB and ESSA have made strides in the reduction of inequality in our nation’s schools but both were burdened with severe underfunding and poor implementation and accountability policies.

NCLB made steps towards the reduction of inequality in students’ education nationally. It aimed to hold schools accountable through a variety of sanctions on those schools most underperforming. This included options for students in persistently underperforming schools to transfer to higher-performing schools and/or to receive free after-school tutoring funded by federal aid in Title 1 (Steinberg and Quinn 192). Both of these options were put to use in areas where this was possible but the concentration of disadvantaged students at underperforming schools in many urban areas made these options difficult to implement and impossible to use in some instances.

The No Child Left Behind Act did not complete the objective entitled in its name for three main reasons (Gamoran 8). NCLB set very unrealistic expectations for all schools nationally and made these expectations universal. NCLB also evaluated educators very ineffectively through student achievement, a metric largely not in the control of the educator. Many teachers could be sanctioned indirectly when their schools failed to make adequate yearly progress (AYP). Lastly, NCLB accountability was ineffective as its implementation was both weak and inconsistent throughout the country. NCLB failed to distinguish ineffective schools with schools of already low performing students (Gamoran 12). These three failures caused NCLB to worsen gaps in many areas, especially those with low-income populations in many urban areas.

The Every Student Succeeds Act abandoned NCLB’s federal role ensuring equal levels of achievement by placing education system controls in the hands of each state. ESSA’s emphasis on growth was an important correction of NCLB’s approach for school’s accountability. ESSA returned the determination of which form of value-added achievement modeling used for the monitoring of individual student progress to each individual state (Gamoran 12). This allowed states to account prior performance levels in each school’s accountability for gains over time.  ESSA also made steps to educate students through a well-rounded curriculum of academic subjects but made funding for this largely up to the district’s discretion creating large inequality in the funding of certain subjects between school districts.

NCLB’s original implementation was to address the majority of states who were ignoring major achievement gaps between disadvantaged students and their peers (Black 1343). As ESSA returned the determination of achievement gaps to the states, this ignorance also returned. While ESSA policy aimed to enforce schools to use multiple measures for their determination of achievement gaps, many schools placed inaccurate weights on specific measures affecting their overall “score” of improvement (Mathis and Trujillo 9). Typically, these measures are standardized test scores which many criticize as too heavily relied upon to assess students’ educational attainments. Now, many educators and researchers suggest the use of performance assessments or portfolios to determine a student’s overall competency and mastery of skills (Allen “Performance Assessment”). As ESSA is still in place today, policymakers must take into account the evidence-based research of the past two decades to repair and/or replace ESSA to hold schools nationally more accountable and continue the reduction of educational inequality in our nation to help our most disadvantaged students.

Summary of Bailey and Dynarski NBER Study

Design

Martha J. Bailey and Susan M. Dynarski studied changes over time in postsecondary education inequality using the 1979 and 1997 National Longitudinal Surveys of Youth in combination with nearly seventy years of US Census data in their paper, “Gains and Gaps: Changing Inequality in U.S. College Entry and Completion”. These two researchers focus on the growth of income gaps in both men and women in college entry, persistence, and completion between 1980 and 2010. Bailey and Dynarski focused on and tracked three educational attainment dimensions; college entry, persistence, and completion. They discovered attainment increased from the cohorts born between 1961 and 1964 to the cohorts born between 1979 and 1982, as well as determining an increase in advantages for children growing up in high-income families. As Bailey and Dynarski continued the narrowing of their research, a new finding emerged that women have largely driven the increase in educational inequality. They determined that this difference is driven by sharp increases in the education of daughters born to high-income parents, as “the female advantage in educational attainment is largest in the top quartile of the income distribution” (Bailey and Dynarski 1). Bailey and Dynarski attempt to determine the best explanation for this increasing inequality in their research. They define the college entry rate as a share of each birth cohort either in school or with college experience at the age of nineteen, even if that experience consists of less than one year of coursework. College completion rate is then defined by the share of each birth cohort that completes a bachelor’s degree by the age of 25, further providing the college persistence rate defined as the college completion rate divided by the college entry rate, which they determine to be the share of those who enter college and go on to complete their graduation. They determine the hypothesized explanations for the increase in educational attainment inequality to include increasing inequality in parents’ incomes, changes in school qualities, rising tuition costs, and the possibility of men and women facing different returns to human capital due to men and women operating in segregated labor markets and asymmetrical marriage markets.

Results and Discussion

Bailey and Dynarski determined multiple explanations for college-based inequalities. Gaps in high school graduation explain roughly half of the inequality in college entry for the later cohort, and the income-based inequality in college entry increased between the two cohorts (Bailey and Dynarski 10). This increase in inequality goes on to explain the increased “penalty” to those who drop out of high school. The inequality by family income in college completion increased between cohorts, just as the inequality in college entry and completion across income groups also increased between cohorts (Bailey and Dynarski 12). As for the asymmetry in educational attainment by gender, it was determined that the inequality in educational attainment rose more among women than among men, driven largely by women from upper-income families (Bailey and Dynarski 17). These recent changes in college entry and completion are more evidence of the recent reversal of the gender gap in postsecondary education. Just as there was an emerging female advantage in high school education seventy years ago, there is now an emerging female advantage in postsecondary educational attainment, with an increased advantage for those women from higher-income families.

Summary and Conclusions

The topic of education is extremely large and diverse, covering different areas such as elementary, high-school, and college as well as professional education, which includes various types of skills training. In adolescence, we can see wage differentials by looking at a variety of indicators including; SAT scores, educational attainment, and high school completion. Higher-income people tend to score higher on their SATs due to them having access to better studying resources than lower-income people, although having high-income does not guarantee a good SAT score. Educational attainment is also highly correlated to the level of wealth of an individual, as wealthier individuals are more likely to obtain higher levels of education.  People who do not obtain a high-school education and go on to earn a GED, are usually doing so in vain as a GED has little to no effect on employment or income level, although it does signal to employers increased willingness to work. College follows a similar path as adolescence, with students from wealthier families attending more selective schools than students from poorer families. Wealthier students also have shown to have a better chance of graduating on time compared to other students. Modern educational policies have sought to help narrow the gap between wealthy and poor families such as the No Child Left behind Act, ESEA, and ESSA which all addressed inequality in public education. While it is largely accepted that NCLB failed in its goals to evaluate schools’ performance, ESSA has largely replaced NCLB and we are yet to see the repercussions of this legislation. There is a clear direction in the story of education, and it is a story of wealth inequality. Although the United States government has tried to lessen the educational attainment gap between wealthy families and poor families, it has so far been mostly unsuccessful, with some success in recent years following ESSA.  It is obvious that wealth provides students with better education and more chances to succeed in better colleges, private schools, and standardized national tests.

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