Income inequality and adolescent 'drop out' behaviors

The proposed research is designed to launch a series of projects into the question of how income inequality affects the life defining decisions made by adolescents and young adults. In a previous paper (Kearney and Levine 2011) we propose a model of “economic despair” that suggests that when economically disadvantaged adolescents are discouraged about their prospects for future economic success, they are relatively more likely to make choices favoring short-term gratification over long-term investments. That earlier work empirically considers the relationship between economic conditions that might negatively impact one’s perception of economic success and early, non-marital childbearing. The data reveal a strong empirical relationship between income inequality and the propensity for economically disadvantaged women to give birth when young and unmarried. We propose to build on that initial research in two ways: (1) by expanding our empirical focus to a broader set of outcomes and (2) by investigating the mediating channels through which income inequality exerts an impact. This proposal is for research that will make strides in both of these ways – first by considering educational investment decisions and second by considering the mediating role of residential and school sorting in driving any observed relationship between income inequality and schooling outcomes.