Providing a platform for serious attempts to figure out what is going on in important policy areas relevant to equitable growth by promoting and challenging different interpretations is exactly the kind of thing the Washington Center for Equitable Growth should be doing. I want to highlight one telling case in point—Jesse Rothstein: “Inequality of Educational Opportunity? Schools as Mediators of the Intergenerational Transmission of Income.” Rothstein writes:
Chetty et al. (2014b) show that children from low-income families achieve higher adult incomes … in some commuting zones (CZs) than in others … [and that] … I investigate whether children’s educational outcomes help to explain the between-CZ differences. I find little evidence that the quality of schools is a key mechanism driving variation in intergenerational mobility. While CZs with stronger intergenerational income transmission have somewhat stronger transmission of parental income to children’s educational attainment and achievement, on average, neither can explain a large share of the between-CZ variation. Marriage patterns explain two-fifths of the variation in income transmission, human capital accumulation and returns to human capital each explain only one-ninth, and the remainder of the variation (about one-third) reflects differences in earnings between children from high- and low-income families that are not mediated by human capital. This points to job networks and the structure of local labor and marriage markets, rather than the education system, as likely factors influencing intergenerational economic mobility …
Now there are a large number of caveats I see here:
- Chetty et al. and Rothstein are both looking at processes that are now a decade in the past.
- Parents’ measured income to child’s measured income is not the intergenerational inequality transmission mechanism for which we are looking.
- Measured human capital is not true human capital.
- The marriage market is tied to predictions of income—and, indeed, gives us information about human capital not found in measures of educational attainment.
But, yes, I think Rothstein is broadly right here—educational systems are a link but not the key link. Functional parts of American society are functional in many ways: labor markets, marriage patterns, social networks, as well as schooling patterns and schooling quality.