The Income-Achievement Gap and Adult Outcome Inequality

FEDS Working Paper No. 2015-041

http://dx.doi.org/10.17016/FEDS.2015.041

61 Pages Posted: 28 Jun 2015

See all articles by Eric Reed Nielsen

Eric Reed Nielsen

Board of Governors of the Federal Reserve System

Date Written: May 14, 2015

Abstract

This paper discusses various methods for assessing group differences in academic achievement using only the ordinal content of achievement test scores. Researchers and policymakers frequently draw conclusions about achievement differences between various populations using methods that rely on the cardinal comparability of test scores. This paper shows that such methods can lead to erroneous conclusions in an important application: measuring changes over time in the achievement gap between youth from high- and low-income households. Commonly-employed, cardinal methods suggest that this "income-achievement gap" did not change between the National Longitudinal Surveys of Youth (NLSY) 1979 and 1997 surveys. In contrast, ordinal methods show that this gap narrowed substantially for reading achievement and may have narrowed for math achievement as well. In fact, any weighting scheme that places more value on higher test scores must conclude that the reading income-achievement gap decreased between these two surveys. The situation for math achievement is more complex, but low-income students in the middle and high deciles of the low-income math achievement distribution unambiguously gained relative to their high-income peers. Furthermore, an anchoring exercise suggests that the narrowing of the income-achievement gap corresponds to an economically significant convergence in lifetime labor wealth and school completion rates for youth from high- and low-income backgrounds.

Keywords: achievement inequality, anchoring, human capital, measurement of inequality, ordinal statistics

JEL Classification: I24, I21, J24, C18, C14

Suggested Citation

Nielsen, Eric Reed, The Income-Achievement Gap and Adult Outcome Inequality (May 14, 2015). http://dx.doi.org/10.17016/FEDS.2015.041. Available at SSRN: https://ssrn.com/abstract=2623627 or http://dx.doi.org/10.2139/ssrn.2623627

Eric Reed Nielsen (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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