Working Paper: NBER ID: w17610
Authors: Jesse Rothstein; Nathan Wozny
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 two commonly used data sets. When we add permanent income to the controls used by Fryer and Levitt (2006), the unexplained gap in 3rd grade shrinks below 0.15 standard deviations, less than half of what is found with their controls.
Keywords: No keywords provided
JEL Codes: I21; I24; J15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| permanent income (D31) | black-white test score gap (I24) |
| current income (E25) | black-white test score gap (I24) |
| permanent income (D31) | test scores (C52) |
| current income (E25) | test scores (C52) |
| controlling for permanent income (D10) | black-white test score gap (I24) |
| controlling for current income (D10) | black-white test score gap (I24) |