The Importance of Narrowing the Income-Achievement Gap
June 8, 2015
Researchers and policymakers frequently draw conclusions about achievement differences between various populations using methods that rely on the cardinal comparability of test scores. However, ordinal methods show this gap narrowed substantially for reading achievement and may have narrowed for math achievement as well.
Ordinal methods using test score data show that the gap in academic achievement between youth from high- and low- income households decreased dramatically between 1980 and 1997.
- Using percentile-equated test scales, there is a strong evidence that the ordinal shifts in reading and Armed Forces Qualifying Test (AFQT) must correspond to unambiguous decreases in the true income-achievement gap.
- Anchoring reading and AFQT test scores on various later-life outcomes shows that these ordinal shifts correspond to economically-important shifts in underlying achievement.
- For white men, the narrowing of the income-achievement gap translates to a narrowing in the lifetime wealth gap of roughly $50,000 and a narrowing of the high school and college completing gaps of 0.05 to 0.08 probability units.
- Changes in math achievement correspond to an ambiguous change in the mean labor wealth gap but a large decrease in the median wealth gap for median high- and low- income white males.
The convergence in achievement between high- and low-income should have been a powerful force reducing adult outcome inequality. This does not imply, however, that inequality in outcomes between youth from high- and low-income households will be lower in the National Longitudinal Surveys of Youth (NLSY97) than in the NLSY79. If the returns to achievement become more convex over time, for example, smaller true achievement differences may well translate to larger absolute outcome differences than in the past. Unfortunately, the young age of the NLSY97 respondents precludes directly examining their lifetime labor market outcomes.
Source: Eric R. Nielsen, "The Income-Achievement Gap and Adult Outcome Inequality," Finance and Economics Discussion Series 2015-041 Board of Governors of the Federal Reserve System, 2015.
Browse more articles on Economic Issues