The Declining American High School Graduation Rate

James Heckman and Paul LaFontaine on growing educational inequality:

The declining American high school graduation rate: Evidence, sources, and consequences, by James J. Heckman and Paul A. LaFontaine, Vox EU: Official statistics for US high school graduation rates mask a growing educational divide. This column presents research showing that a record number of Americans are going to university – while an increasing number are dropping out of high school. This poses major social challenges for the United States.

The high school graduation rate is a barometer of the health of American society and the skill level of its future workforce. Throughout the first half of the 20th century, each new cohort of Americans was more likely to graduate high school than the preceding one. This upward trend in secondary education increased worker productivity and fueled American economic growth (Goldin and Katz 2003).

During the past 25 years, growing wage differentials between high school graduates and dropouts increased the economic incentives to graduate high school. The real wages of high school dropouts have declined since the early 1970s while those of more skilled workers have risen sharply.[1] Heckman, Lochner, and Todd (2008) show that in recent decades, the internal rate of return to graduating high school compared to dropping out has increased dramatically and is now over 50 percent. Therefore, it is surprising and disturbing that, at a time when the premium for skills has increased and the return to graduating high school has risen, the high school dropout rate in America is increasing. America is becoming a polarised society. Proportionately more American youth are going to college and graduating than ever before. At the same time, proportionately more are failing to complete high school. ...

A number of recent studies have questioned the validity of the official statistics and attempt to develop more accurate estimators of high school graduation rates.[2] Heated debates about the levels and trends in the true high school graduation rate have appeared in the popular press.[3] Depending on the data sources, definitions, and methods used, the U.S. graduation rate has been estimated to be anywhere from 66 to 88 percent in recent years—an astonishingly wide range for such a basic statistic. The range of estimated minority rates is even greater—from 50 to 85 percent.

In Heckman and LaFontaine (2007), we demonstrate why such different conclusions are reached in previous studies. We use cleaner data, better methods and a wide variety of data sources to estimate U.S. graduation rates. When comparable measures are used on comparable samples, a consensus can be reached across all data sources. After adjusting for multiple sources of bias and differences in sample construction, we establish that (1) the U.S. high school graduation rate peaked at around 80 percent in the late 1960s and then declined by 4-5 percentage points; (2) the actual high school graduation rate is substantially lower than the 88 percent official estimate; (3) about 65 percent of blacks and Hispanics leave school with a high school diploma and minority graduation rates are still substantially below the rates for non-Hispanic whites. Contrary to claims based on the official statistics, we find no evidence of convergence in minority-majority graduation rates over the past 35 years. (4) Exclusion of incarcerated populations from the official statistics greatly biases the reported high school graduation rate for blacks.

These trends are for persons born in the United States and exclude immigrants. The recent growth in unskilled migration to the U.S. further increases the proportion of unskilled Americans in the workforce apart from the growth due to a rising high school dropout rate. ... 

The decline in high school graduation is greater for males than it is for females. Men now graduate from high school at significantly lower rates than women. For recent birth cohorts, the gap in college attendance between males and females is roughly 10%. However, the gap in college attendance given high school graduation is only 5%. Half of the growing gender gap in college going ... can be explained by declining rates of high school graduation.

Especially striking are the comparisons in graduation rates between minorities and whites. Our estimated black graduation rate is 15 percentage ... lower than the official completion rate. ... The official statistics show that white and minority high school completion rates have converged since the early 1970s. However, the official estimates exclude those who are in prison. We show that when we count GED recipients as dropouts (incarcerated or not), there is little convergence in high school graduation rates between whites and minorities over the past 35 years. A significant portion of the racial convergence reported in the official statistics is due to black males obtaining GED credentials in prison. Research by Tyler and Kling (2007) and Tyler and Lofstrom (2008) shows that, when released, prison GEDs earn at the same rate as non-prison GEDs, and the GED does not reduce recidivism.

In the first half of the 20th century, growth in high school graduation was the driving force behind increased college enrolments. The decline in high school graduation since 1970 (for cohorts born after 1950) has flattened college attendance and completion rates as well as growth in the skill level of the U.S. workforce. To increase the skill levels of its future workforce, America needs to confront a large and growing dropout problem.

The origins of this dropout problem have yet to be fully investigated. Evidence suggests a powerful role of the family in shaping educational and adult outcomes. A growing proportion of American children are being raised in disadvantaged families. This trend promises to reduce productivity and promote inequality in the America of tomorrow.