Increasing Inequality in Parent Incomes and Children’s Completed Schooling: Correlation or Causation?

Greg J. Duncan, University of California, Irvine
Ariel Kalil, University of Chicago
Kjetil Telle, Statistics Norway
Kathleen M. Ziol-Guest, Cornell University

This paper tracks changes in income inequality and educational attainment between children born into low- and high-income households in the U.S. between 1954 and 1985. Using data from the Panel Study of Income Dynamics, we find that the schooling gap between high and low income children grew by half a year. We next attempt to account for the increase in the schooling gap by changing gaps in family income and other demographic factors (increasing single parenthood and parent education, falling family sizes). Depending on the time period chosen, increases in the income gap between high and low income children account for between 24% and 82% of the increasing schooling gap. Surprisingly, other demographic factors accounted for relatively little of the gap, particularly over the full time period of our analysis.