'Economic despair' spurs low-income boys to drop out of high school

El-Erian warns of 'lost generation' as income gap grows
El-Erian warns of 'lost generation' as income gap grows

They just don't think it's worth it.

Poor teens who grow up in areas with high levels of income inequality are more likely to drop out of high school than their peers who live in more equal neighborhoods, according to new research from the Brookings Institute. This is particularly true of boys.

"Income inequality has ... a despair effect on kids at the bottom," said study co-author Melissa Kearney, a non-resident senior fellow at Brookings. "Instead of incentivizing them to stay in school and invest more in themselves, it causes them to think 'why bother?'"

Related: The 'birth lottery' and economic mobility

Take Louisiana and the District of Columbia, which have some of the highest levels of income inequality in the country. One quarter or more of high schoolers there fail to graduate within four years.

But in Vermont and Nebraska, where inequality is lower, only around 10% drop out.

The findings counter conventional wisdom among economists that high levels of inequality motivate lower-income students to work harder so they can advance.

graduation rate inequality

When measuring income inequality, the researchers looked at the gaps between the poor and middle class because it's a more realistic goal than getting to the top. However, they found that low-income students living in very unequal areas even see a middle class life as unattainable.

"[They think] maybe it's not worth it to stay in school because I'm not going to be that person," said Kearney, who terms the view "economic despair."

Academic performance is not the main cause. The study found that 51% of dropouts in more equal states left because of poor grades, while only 21% of those in very unequal states did.

The lack of a high school diploma can have big economic consequences. The median earnings for young adults who didn't finish high school were $23,900 in 2013, compared to $30,000 for high school grads and $48,500 for those with a bachelor's degree, according to Department of Education data. Dropouts are also more likely to be jobless. Their unemployment rate was 7.3%, compared to 5.3% for high school graduates and 2.5% for those with bachelor's degrees.

Related: Where poor kids stay poor

The Brookings study is the latest to look at how inequality and geography relate to upward mobility. Earlier work by two Harvard professors found that where children are raised has an impact on their chances of climbing the economic ladder.

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