Income Inequality, Social Mobility, and the Decision to Drop Out of High School

This paper considers the role that high levels of income inequality
and low rates of social mobility play in driving the educational
attainment of youth in low-income households in the United States.

 Using high school degree status from five individual-level surveys,
this analysis reveals that low-socioeconomic status (SES) students,
and particularly boys, who grow up in locations with greater levels
of  income inequality and lower levels of social mobility
are relatively more likely to drop out of high school, conditional on
other individual characteristics and contextual factors. 

The data indicate that this relationship does not reflect alternative
characteristics of the place, such as poverty concentration,
residential segregation, or public school financing. 

The results are consistent with a class of explanations that
emphasize a role for perceptions of one's own identity, position in
society, or chances of success.  In the end, these empirical results
indicate that high levels of income inequality and low
levels of social mobility hinder educational advancement for
disadvantaged youth.