Social background effects on school and job opportunities

ABSTRACT

This paper proposes a theory on how students’ social background affects their school attainment and job opportunities. I study a set-up where students differ in ability and social background, and I analyse the interaction between a school and an employer. Students with disadvantaged background are penalised compared to other students: they receive less teaching and/or are less likely to be hired. A surprising result is that policy aiming to subsidise education for disadvantaged students might in fact decrease their job opportunities.

KEYWORDS:

• Social background
• ability
• signalling

JEL Classification:

• I21
• J24

Acknowledgements

I would like to thank Giorgio Brunello, Buly Cardak, Carlos Carrillo-Tudela, Gianni De Fraja, Vincenzo Denicol'o, Gaia Garino, Andrea Ichino, Matteo Lippi Bruni, Miltos Makris, Suresh Mutuswami, Joanna Poyago-Theotoky, Ludovic Renou, Javier Rivas, Rich Romano, Robert Schwager, Ian Walker, Piercarlo Zanchettin, the Editor Colin Green and the two anonymous referees for many suggestions that have led to substantial improvement on previous drafts. Earlier versions of this paper has been presented to the Royal Economic Society Ph.D. meeting, London 2010 and 2011, the Summer School in Public Economics, Barcelona 2010, the Scottish Economic Society Annual Conference, Perth 2009, the ASSET conference 2011 and to seminars in Leicester, Lancaster, Konstanz and Goettingen, 2010 and Bank of Italy, Rome 2009, where I received helpful comments.

Disclosure statement

No potential conflict of interest was reported by the author.

Supplemental data

Supplemental data for this article can be accessed at http://dx.doi.org/10.1080/09645292.2015.1074983

Notes

1. See Chan, Hao, and Suen (2007), Schwager (2012), Bar, Kadiyali, and Zussman (2012) and Popov and Bernhardt (2013) for some relevant contributions. In a framework similar to the present, Tampieri (2013) examines grade inflation when it can be targeted across social groups.

2. For simplicity, we abstract from factors such as competition between schools and between employers.

3. Peer group effects are considered explicitly in Arnott and Rowse (1987), de Bartolome (1990) and Epple and Romano (1998), inter alia.

4. Educational standard can be employed as a tool for welfare analysis. A normative extension of our set-up can be considered for future work.

5. Note that the school has perfect information of the student types.

6. To relax this assumption would allow us to compare schools with different technology. This investigation can be interesting and may be considered for future work.

7. Given this strategy, the total of hired students might be higher or lower than job capacity, and in the former case clearly this is again.

8. Note that, if , the middle- or low-employment equilibrium is equivalent for a disadvantaged student.

9. To cite some example, in 2001 the Department for Education in the USA funded ‘No Child Left Behind’ (NCLB). This is a multibillion dollar policy initiative to study the determinants of test score gaps among students of schooling age and prevent adverse effects in adulthood for those left behind at school. This program addresses such policy issues as low employment and wage profiles over time as well as health problems that lagging behind at school may lead to in adulthood. Since 2003 the Department for Education in the UK has funded ‘Every child matters’, which is a similar policy initiative to NCLB, but it puts additional emphasis on well-being and fostering positive behaviour in children.