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PACEs in Higher Education

Income Segregation and Intergenerational Mobility Across Colleges in the United States [academic.oup.com]

 

By Raj Chetty, John N. Friedman, Emmanuel Saez, et al., The Quarterly Journal of Economics, August 2020

Abstract

We construct publicly available statistics on parents’ incomes and students’ earnings outcomes for each college in the United States using deidentified data from tax records. These statistics reveal that the degree of parental income segregation across colleges is very high, similar to that across neighborhoods. Differences in postcollege earnings between children from low- and high-income families are much smaller among students who attend the same college than across colleges. Colleges with the best earnings outcomes predominantly enroll students from high-income families, although a few mid-tier public colleges have both low parent income levels and high student earnings. Linking these income data to SAT and ACT scores, we simulate how changes in the allocation of students to colleges affect segregation and intergenerational mobility. Equalizing application, admission, and matriculation rates across parental income groups conditional on test scores would reduce segregation substantially, primarily by increasing the representation of middle-class students at more selective colleges. However, it would have little effect on the fraction of low-income students at elite private colleges because there are relatively few students from low-income families with sufficiently high SAT/ACT scores. Differences in parental income distributions across colleges could be eliminated by giving low- and middle-income students a sliding-scale preference in the application and admissions process similar to that implicitly given to legacy students at elite private colleges. Assuming that 80% of observational differences in students’ earnings conditional on test scores, race, and parental income are due to colleges’ causal effects—a strong assumption, but one consistent with prior work—such changes could reduce intergenerational income persistence among college students by about 25%. We conclude that changing how students are allocated to colleges could substantially reduce segregation and increase intergenerational mobility, even without changing colleges’ educational programs.

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Comments (1)

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Thank you for sharing this. It is interesting to read. This is really deep statistics (not my strong suit), so I'm curious to hear from others about how to interpret this research.

If I'm reading the research correctly, it is proposing that SAT/ACT scores should/could be used in admissions decisions to prevent segregation and improve intergenerational income mobility. My concern with two of the base assumptions of this research are 1) the use of SAT/ACT test scores and 2) the assumption that the goal is to maintain the same level of racial make-up within the institution while improving income mobility. Because standardized tests have been shown to reflect systemic racial, gender, and wealth disparities, my interpretation of this research is that the result would essentially perpetuate the systemic disparities while creating more opportunities for more non-Hispanic white male students.

If I'm missing something, I would truly appreciate hearing a different interpretation of the article.

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