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Goldin and Katz (2008) document the key role that the educational attainment of native-born workers in the U.S. has played in determining changing returns to skill and income distribution in the twentieth century. Understanding the forces driving the supply of educated workers is thus critical. This paper focuses on the role of elementary and secondary educational institutions in the United States, which have changed dramatically over the latter half of the century, in determining high school graduation rates. In part, these institutional changes have been formally legislated and implemented as specific programs, but the programs alone do not explain the full extent of the dramatic rise in spending. I review relevant literatures and policy history, and present original descriptive analysis of the role of income inequality in shaping graduation and spending from 1963 to 2007. Results suggest that inequality, which previous research establishes as negatively correlated with the establishment of public secondary schooling earlier in the twentieth century, was positively correlated not only with education spending levels but also with aggregate high school graduation rates at the state level. This relationship holds with inequality at the bottom of the distribution as well as at the top.

The option to obtain a General Educational Development (GED) certificate changes the incentives facing high school students. This chapter evaluates the effect of three different GED policy innovations on high school graduation rates. A 6-point decrease in the GED pass rate produced a 1.3-point reduction in high school dropout rates. The introduction of a GED certification program in high schools in Oregon produced a 4% decrease in high school graduation rates. Introduction of GED certificates for civilians in California increased the dropout rate by 3 points. The GED program induces students to drop out of high school.

This chapter deploys a methodological innovation to address the often-feared possibility that the Mexican American second generation will assimilate “downward” and develop into an underclass. To solve the problem of measuring the characteristics of the second generation in decennial census data, this chapter uses a proxy group, defined by individuals who arrived in the United States as very young children, before the age of three. Based on data for this group, high-school dropout rates for the Mexican second generation are quite high but indicators of involvement in risky behaviors are relatively low. Consistent with this picture, the rates of labor-force attachment are high, and consequently the earnings payoff to efforts to improve the high-school graduation rates of Mexican Americans would be substantial. The benefits to families would also be considerable because of the relatively high rate of intact families among Mexican Americans.

This chapter returns to a forty-year-old debate between Griliches and sociologists who emphasized the structure of organizations, informal networks, and “change agents” as forces affecting the diffusion of hybrid corn. It considers state-level factors associated with the adoption of a variety of technological innovations over the last seventy-five years: hybrid corn and farm tractors in the first half of the twentieth century, computers in the 1990s, and treatment following heart attacks with beta-blockers during the last decade. It shows that some states consistently adopted new effective technology, whether it be hybrid corn, farm tractors, or effective treatments for prevention of recurrent heart attacks, such as beta-blockers. The adoption of these new highly effective technologies was closely associated with social capital and state-level 1928 high school graduation rates. The chapter suggests that economic models may be useful in identifying why some regions are more likely to adopt early, but sociological barriers—perhaps related to lack of social capital or informational networks—can potentially explain why other regions lag far behind.

Up$tart bundles applications for social benefits—Pell Grants, the Earned Income Tax Credit, and the Supplemental Nutrition Assistance Program—in order to generate income for poor students, increasing their likelihood of graduating from college. In addition to increasing student income, Up$tart indirectly raises significantly revenues for financially stressed institutions of higher education. Because poverty afflicts minorities of color disproportionately, Up$tart promises to accelerate the upward mobility of African American, Hispanic, and Native American students. Bundling benefit applications is also applicable for other fields of activity where silo programs impede benefit take-up rates.

The American higher education system consists of over 4,700 institutions educating over twenty-one million students. The most striking feature of this system is its diversity. There is no “typical college.” Much of the story about the future of America’s four-year higher education institutions is found in their differences, not their similarities. Schools are public and private, large and small, elite and open enrollment, tuition dependent and well endowed, liberal arts oriented and vocational. The challenges facing America’s colleges and universities will affect the diverse parts of this system in very different ways. Generalizing about this system can be very dangerous.