NBER WORKING PAPER SERIESHARMING THE BEST:HOW SCHOOLS AFFECT THE BLACK-WHITE ACHIEVEMENT GAPEric A. HanushekSteven G. RivkinWorking Paper 14211http://www.nber.org/papers/w14211NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts AvenueCambridge, MA 02138August 2008Support for this work has been provided by the Packard Humanities Institute. The views expressedherein are those of the author(s) and do not necessarily reflect the views of the National Bureau ofEconomic Research.© 2008 by Eric A. Hanushek and Steven G. Rivkin. All rights reserved. Short sections of text, notto exceed two paragraphs, may be quoted without explicit permission provided that full credit, including© notice, is given to the source.Harming the Best: How Schools Affect the Black-White Achievement GapEric A. Hanushek and Steven G. RivkinNBER Working Paper No. 14211August 2008JEL No. H4,I2,I28,J18ABSTRACTSizeable achievement differences by race appear in early grades, but substantial uncertainty existsabout the impact of school quality on the black-white achievement gap and particularly about its evolutionacross different parts of the achievement distribution. Texas administrative data show that the overallgrowth in the achievement gap between third and eighth grade is higher for students with higher initialachievement and that specific teacher and peer characteristics including teacher experience and peerracial composition explain a substantial share of the widening. The adverse effect of attending schoolwith a high black enrollment share appears to be an important contributor to the larger growth in theachievement differential in the upper part of the test score distribution. This evidence reaffirms themajor role played by peers and school quality, but also presents a policy dilemma. Teacher labor marketcomplications, current housing patterns, legal limits in segregation efforts, and uncertainty about theoverall effects of specific desegregation programs indicate that effective policy responses will almostcertainly involve a set of school improvements beyond simple changes in peer racial composition andthe teacher experience distribution.Eric A. HanushekHoover InstitutionStanford UniversityStanford, CA 94305-6010and [email protected] G. RivkinAmerst CollegeDepartment of EconomicsP.O. Box 5000Amherst, MA 01002-5000and [email protected] the Best: How Schools Affect the Black-White Achievement Gap By Eric A. Hanushek and Steven G. Rivkin Perhaps no other social policy issue has been as important or as stubborn to deal with as racial gaps in economic outcomes. Black-white differences in academic attainment, occupation, and earnings, while showing some improvement over the past quarter century, have remained large. Much of the policy effort aimed at reducing these gaps focuses on public elementary and secondary schools. This emphasis hinges upon the widespread beliefs that school and peer characteristics disadvantage blacks relative to whites and that appropriate interventions can raise achievement and future life outcomes. This paper investigates the first of these beliefs through an examination of the changes in the black-white achievement gap as students progress through school. The findings suggest that the achievement gap increase across grades is larger for blacks with higher initial achievement, and that this is due primarily to stronger deleterious effects for initially high achieving blacks of attending schools with a high black enrollment share. Differences by initial achievement in both the growth in the achievement gap and relationship to school racial composition are striking and carry important implications for the future education and earnings distributions. The expanding achievement racial gap as students progress through school is fueled by relatively constant gaps at the bottom of the black and the white distributions and a dramatically increasing gap at the top. Given the relationship between cognitive skills and economic outcomes, the truncation at the top of the black achievement distribution does not bode well for the future expansion of the number of blacks who complete college and graduate school and who enter high prestige occupations and positions of power. We begin with a description of the evolution of achievement differences by initial achievement level, focusing on problems introduced by test measurement error induced regression to the mean. We follow this with an investigation of the contributions of school and peer3characteristics to these changes, paying particularly attention to the possibility that the importance of specific factors may differ by initial achievement. The findings indicate that both the growth in the achievement gap and the effects of specific variables differ significantly by position in the achievement distribution at entry to elementary school with the largest adverse impacts on blacks who enter being the best prepared. 1. Economic Motivation Table 1 provides a stark picture of the black-white differences in academic, economic, and social outcomes that have survived the schooling policies of the last decades. Among men and women 20 to 24 years old, blacks are far less likely to complete or be in the process of completing college, far less likely to work, and far more likely to be in prison or other institutions. The rates of incarceration and non-employment for young black men paint a particularly dire picture. Cognitive skills appear strongly correlated with black and white gaps in school attainment and in wages, and this has motivated aggressive policies to raise the quality of education for blacks.1 The landmark decision in Brown v Board of Education that attacked racial segregation of schools was the modern beginning of concerted federal, state, and local actions directed at improving black achievement.2 Along with subsequent court cases, Brown ushered in a profound change in both school and peer characteristics, while contemporaneous increases in school spending, brought on in part by school finance litigation, further raised the resources devoted to black students in the public schools. Nonetheless, racial disparities have been stubbornly resistant to policy, raising the possibility that schools really cannot be effective policy instruments.3 1 O'Neill (1990) and Neal and Johnson (1996) provide evidence on wage differences, and Rivkin (1995) provides evidence on differences in educational attainment. A