Research Briefs

Spring 2012

Author(s): Federal Reserve Bank of San Francisco

Income Inequality and the Academic Achievement Gap

The trend of rising inequality has important implications for the life chances of low-income children, who are more likely than their higher-income peers to face multiple challenges when it comes to achieving academic success. The income gap has widened over the past forty years, but has the achievement gap between children in high- and low-income families also widened?

Sean Reardon of Stanford University addresses this question, using data from nineteen nationally representative studies that provide information on the math and reading skills of students born from the mid-1940s through 2001. He finds that the achievement gap between children from high- and low-income families is 30 to 40 percent higher than among children born in 2001 than among those born twenty-five years earlier. He further posits that the income achievement gap has been growing for at least the past fifty years, although the data are less definitive for children born before 1970.

Reardon notes that the income achievement gap is now nearly twice as large as the black-white achievement gap, whereas half a century ago, the black-white gap was one and a half to two times as large as the income achievement gap. Furthermore, rising income inequality does not appear to be the primary reason that the income achievement gap has grown. Instead, Reardon suggests that “a dollar of income (or factors correlated with income) appears to buy more academic achievement than it did several decades ago.” A given difference in family incomes now corresponds to a 30 to 60 percent larger difference in achievement than it did for children born in the 1970s. At the same time, the relationship between parental education and children’s achievement has remained relatively stable during the last fifty years, which suggests that the growing income achievement gap is not the result of a gap between children with parents of varying levels of education. Indeed, family income is now nearly as strong as parental education in predicting children’s achievement.

Reardon, Sean. "The Widening Academic Achievement Gap between the Rich and the Poor: New Evidence and Possible Explanations." Whither Opportunity? Rising Inequality and the Uncertain Life Chances of Low-Income Children. Ed. Richard Murnane & Greg Duncan. New York: Russell Sage Foundation, 2011.


Immigrants and the U.S. Safety Net

Beginning with the 1996 federal welfare reform law, many of the central safety net programs in the U.S. eliminated eligibility for legal immigrants, who had been previously eligible on the same terms as citizens. These dramatic cutbacks affected eligibility not only for cash welfare assistance for families with children, but also for food stamps, Medicaid, State Children’s Health Insurance Program (SCHIP), and Social Security Insurance (SSI). In a recent paper from the National Bureau of Economic Research, Marianne Bitler of UC Irvine and Hilary Hoynes of UC Davis examine the status of the U.S. safety net for immigrants and their family members.

The authors use data from the 1995 to 2010 Annual Social and Economic Supplement to the Current Population Survey (CPS), which collects labor market, income, and program participation information, as well as demographic information, including nativity status. The safety net programs measured in their analysis include Aid to Families with Dependent Children/Temporary Assistance for Needy Families, food stamps, Medicaid, State Children’s Health Insurance Program (SCHIP), Social Security Insurance (SSI), school lunch, Low Income Home Energy Assistance Program, and housing benefits.

The study finds that participation in the safety net declined for immigrants compared to natives, and the declines were largest for food stamps and SSI (both of which are the programs with the most severe restrictions for immigrants). Medicaid/SCHIP participation increased for immigrants compared to natives, which the authors suggest may reflect the success of outreach efforts of those programs to minority groups. When the authors compared immigrant versus native low-income households with children, it became apparent that immigrant households rely more heavily on earnings and less on the safety net than their native counterparts. They also find that labor market contractions during and after the Great Recession have led to larger increases in poverty for children in immigrant headed households compared to native-headed households. Further, their results indicate that the safety net offers greater protection from the economic downturn for children in native-headed households than for children in immigrant-headed households.

Bitler, Marianne and Hilary W. Hoynes. “Immigrants, Welfare Reform, and the U.S. Safety Net,” National Bureau of Economic Research Working Paper No. 17667, 2011.

The views expressed are not necessarily those of the Federal Reserve Bank of San Francisco or the Federal Reserve System. Material herein may be reprinted or abstracted provided
Community Investments is credited. Please provide our Community Development Department with a copy of any publication in which material is reprinted

Other articles in this issue

CI Notebook

Doing the Math: The Challenges and Opportunities of Measuring Results in Community Development

Advancing Social Impact Measurement to Build an Asset Class: The Appeal of Social Impact Bonds

Tensions and Opportunities in Evaluating Place-based Interventions

CDFIs as Catalysts for Improving Social Outcomes

Community Perspectives: Designing Responsive Community Development Investments

The Supplemental Poverty Measure

Data Snapshot: Poverty

Doctor CRA