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Permanent Income and the Black-White Test Score Gap

Goldman School of Public Policy Working Paper No. GSPP10-014

40 Pages Posted: 12 Dec 2010  

Jesse Rothstein

University of California, Berkeley, The Richard & Rhoda Goldman School of Public Policy; University of California, Berkeley, College of Letters & Science, Department of Economics; National Bureau of Economic Research (NBER)

Nathan Wozny

US Air Force - Department of Economics and Geosciences

Multiple version iconThere are 2 versions of this paper

Date Written: December 2010

Abstract

Analysts often examine the black-white test score gap conditional on family income. Typically only a current income measure is available. We argue that the gap conditional on permanent income is of greater interest, and we describe a method for identifying this gap using an auxiliary data set to estimate the relationship between current and permanent income. Current income explains only about half as much of the black-white test score gap as does permanent income, and the remaining gap in math achievement among families with the same permanent income is only 0.2 to 0.3 standard deviations in the CNLSY and ECLS samples. When we add permanent income to the controls used by Fryer and Levitt (2006), the unexplained gap in 3rd grade shrinks below 0.15 SDs, less than half of what is found with their controls.

Suggested Citation

Rothstein, Jesse and Wozny, Nathan, Permanent Income and the Black-White Test Score Gap (December 2010). Goldman School of Public Policy Working Paper No. GSPP10-014. Available at SSRN: https://ssrn.com/abstract=1722765 or http://dx.doi.org/10.2139/ssrn.1722765

Jesse Rothstein (Contact Author)

University of California, Berkeley, The Richard & Rhoda Goldman School of Public Policy ( email )

2607 Hearst Avenue
Berkeley, CA 94720-7320
United States

HOME PAGE: http://gsppi.berkeley.edu/faculty/jrothstein

University of California, Berkeley, College of Letters & Science, Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nathan Wozny

US Air Force - Department of Economics and Geosciences ( email )

Colorado Springs, CO
United States

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