Tuesday, October 29, 2019
John N. Friedman (Brown) presents Income Segregation and Intergenerational Mobility Across Colleges in the United States (with Raj Chetty (Harvard), Emmanuel Saez (UC-Berkeley), Nicholas Turner (Federal Reserve Board) & Danny Yagan (UC-Berkeley)) at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:
We construct publicly available statistics on parents’ incomes and students’ earnings outcomes for each college in the U.S. using de-identified data from tax records. These statistics reveal that the degree of parental income segregation across colleges is very high, similar to that across neighborhoods where children grow up. Differences in post-college earnings between children from low- and high-income families are much smaller among students who attend the same college than across colleges. Colleges with the best earnings outcomes predominantly enroll students from high-income families, although a few mid-tier public colleges have both low parent income levels and high student earnings. Linking these income data to SAT and ACT scores, we analyze how changes in the college admissions process would affect segregation and intergenerational mobility.
Equalizing application, admission, and matriculation rates across parental income groups conditional on test scores would increase the fraction of middle-class students at the most selective colleges substantially but leave the fraction of low-income students unchanged — suggesting that there is a “missing middle” at the most selective colleges. Income segregation across colleges would be fully eliminated by a “need-affirmative” policy that gives lower-income applicants a boost in test scores similar to that implicitly given to legacy students at elite private colleges. Assuming that differences in students’ earnings conditional on test scores and parent income reflect colleges’ causal effects — an assumption consistent with prior estimates — such a policy would reduce intergenerational income persistence among college students by one-third.
We conclude that feasible changes in the allocation of students to colleges could substantially reduce segregation and increase intergenerational mobility, even without changes to colleges’ educational programs.