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High school graduation rate is a barometer of the health of American society

June 20, 2008 The Foundation and Application of Disparate Impact Doctrine

James J. Heckman and Paul A. LaFontaine:

The high school graduation rate is a barometer of the health of American society and the skill level of its future workforce. Throughout the first half of the 20th century, each new cohort of Americans was more likely to graduate high school than the preceding one. This upward trend in secondary education increased worker productivity and fueled American economic growth (Goldin and Katz 2003). During the past 25 years, growing wage differentials between high school graduates and dropouts increased the economic incentives to graduate high school. The real wages of high school dropouts have declined since the early 1970s while those of more skilled workers have risen sharply.

 One graduation rate measure issued by the National Center for Educational Statistics (NCES) – widely regarded as the official rate – estimates that U.S. students responded to the increasing demand for skill by completing high school at increasingly higher rates. By this measure, U.S. schools now graduate nearly 88 percent of students and black graduation rates have converged to those of non-Hispanic whites over the past four decades.

 A recent paper by Heckman and LaFontaine (2007) shows across a wide variety of data sources that these numbers are far from the truth. After adjusting for multiple sources of bias and differences in sample construction, they establish that, for native born Americans, (1) the U.S. high school graduation rate peaked at around 80 percent in the late 1960s and then declined by 4-5 percentage points; (2) the actual high school graduation rate is substantially lower than the 88 percent official estimate; (3) about 65 percent of blacks and Hispanics leave school with a high school diploma and minority graduation rates are still substantially below the rates for non-Hispanic whites. Contrary to claims based on NCES measures, they find no evidence of convergence in minority-majority graduation rates over the past 35 years. (4) Exclusion of the incarcerated populations from the official statistics greatly biases minority estimates and a large fraction of minority high school credentials are produced in prisons.

 The decline in high school graduation is of interest in its own right as a measure of the performance of American schools. It has important implications for interpreting a wide variety of educational statistics. The slowdown in the high school graduation rate accounts for a substantial portion of the recent slowdown in the growth of college educated workers in the U.S. This slowdown is not due to a decline in rates of college attendance among those who graduate high school. In the first half of the 20th century, growth in high school graduation was the driving force behind increased college enrolments. The decline in high school graduation since 1970 (for cohorts born after 1950) has flattened college attendance and completion rates as well as growth in the skill level of the U.S. workforce.

 It is surprising and disturbing that, at a time when the premium for skills has increased and the return to graduating high school has risen, the high school dropout rate in America is increasing. America is becoming a polarized society. Proportionately more American youth are going to college and graduating than ever before. At the same time, proportionately more are failing to complete high school. The origins of this dropout problem have yet to be fully investigated. Evidence presented in a forthcoming book, Heckman and LaFontaine (2008), suggests a powerful role of the family in shaping educational and adult outcomes. A growing proportion of American children are being raised in disadvantaged families. This trend promises to reduce productivity and promote inequality in the America of tomorrow. To increase the skill levels of its future workforce, America needs to confront a large and growing dropout problem.

 DeLong, J. B., C. Goldin, and L. F. Katz, “Sustaining U.S. Economic Growth,” in Agenda for the Nation, H. Aaron, et al., eds., Washington, D.C.: The Brookings Institution, 2003, pp. 17-60.

 Heckman, James J. and Paul A. LaFontaine, “The American High School Graduation Rate: Trends and levels.” Working Paper 13670, National Bureau of Economic Research, (2007). Download from http://ftp.iza.org/dp3216.pdf.

 Heckman, James J., and Paul LaFontaine, Testing the Test: What the GED Reveals and Conceals, (Chicago: University of Chicago Press, 2008) Forthcoming.