Saving the American Dream? Education Policies in Spatial General Equilibrium

Fabian Eckert and Tatjana Kleineberg

No 47, Opportunity and Inclusive Growth Institute Working Papers from Federal Reserve Bank of Minneapolis

Abstract: Children's education and economic opportunities differ substantially across US neighborhoods. This paper develops and estimates a spatial equilibrium model that links children's education outcomes to their childhood location. Two endogenous factors determine education choices in each location: local education quality and local labor market access. We estimate the model with US county-level data and study the effects of a school funding equalization on education outcomes and social mobility. The reform's direct effects improve education outcomes among children from low-skill families. However, the effects are weaker in spatial general equilibrium because average returns to education decline and residential and educational choices of low-skill families shift them toward locations with lower education quality.

Keywords: Intergenerational mobility; Equality of opportunity; School access; Education reform; Regional labor markets; Economic geography; Spatial economics (search for similar items in EconPapers)
JEL-codes: E24 E62 I24 I28 R12 R23 (search for similar items in EconPapers)
Pages: 66
Date: 2021-03-22
New Economics Papers: this item is included in nep-geo, nep-lab, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Saving the American Dream ? Education Policies in Spatial General Equilibrium (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmoi:90368

DOI: 10.21034/iwp.47

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