The declining American high school graduation rate: Evidence, sources, and consequences

James Heckman, Paul LaFontaine

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.

The graduation rate issued by the National Center for Educational Statistics (NCES) – widely regarded as the official rate – shows that U.S. students responded to the increasing demand for skill by completing high school at increasingly higher rates. By this measure, U.S. schools now graduate nearly 88 percent of students and black graduation rates have converged to those of non-Hispanic whites over the past four decades.

Who is graduating?

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.

Troubling statistics

The most significant source of bias in the official statistics comes from including GED (General Educational Development) recipients as high school graduates. GEDs are high school dropouts who certify as the equivalents of ordinary graduates through passing an exam. Currently 20 percent of all new high school credentials issued each year are to GEDs. In recent years, inclusion of GEDs as high school graduates has biased graduation rates upwards of 7-8 percentage points. A substantial body of scholarship summarised in Heckman and LaFontaine (2008) shows that the GED program does not benefit most participants, and that GEDs perform at the level of dropouts in the U.S. labour market. The GED program conceals major problems in American society.

The decline in high school graduation is of interest in its own right as a measure of the performance of American schools. It has important implications for interpreting a wide variety of educational statistics. The slowdown in the high school graduation rate accounts for a substantial portion of the recent slowdown in the growth of college educated workers in the U.S. workforce (see Card and Lemieux, 2004, and Ellwood, 2001). This slowdown is not due to a decline in rates of college attendance among those who graduate high school.

Table I performs standard growth accounting, decomposing the change in college graduation into the change due to high school graduation, the change in college attendance given high school graduation, and the change in college graduation given college attendance. It shows that the growth in college attendance and graduation for cohorts born before 1950 was fueled by growth in high school graduation. This contribution diminishes and turns negative for more recent cohorts of Americans.

Table I. Decomposition of the Sources of Change in College Graduation in the Cohorts Born between 1900 and 1980. Broken Down by Birth Cohorts 1900-1949 vs. Birth Cohorts 1950-1980. Change in college graduation rate due to change in… High School Graduation Rate College Attendance Given High School Graduation Finishing College Given Enrollment in College Interaction Overall Birth Years 1900-1949 8.99% 3.17% 0.81% 0.92% % of Total Change 64.71% 22.86% 5.80% 6.63% Birth Years 1950-1980 -1.47% 6.70% 5.20% 0.03% % of Total Change -14.05% 64.02% 49.75% 0.28% Males Birth Years 1900-1949 12.38% 3.81% 0.40% 0.35% % of Total Change 73.10% 22.49% 2.36% 2.06% Birth Years 1950-1980 -1.59% 2.90% 0.86% 0.08% % of Total Change -70.02% 128.26% 38.14% 3.63% Females Birth Years 1900-1949 7.06% 3.69% 2.19% 0.78% % of Total Change 51.44% 26.89% 15.98% 5.68% Birth Years 1950-1980 -0.94% 9.50% 6.20% 0.65% % of Total Change -6.13% 61.70% 40.23% 4.20% Source: Heckman and LaFontaine (2007)

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 documented by Goldin, Katz and Kuziemko (2006) 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 points higher than the 50% rate reported in some recent studies, but it is also 15 points lower than the official completion rate. About 65% of blacks and Hispanics leave secondary schooling with a diploma. An additional 5% eventually receive a regular diploma through a variety of job training and adult education programs. 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.

Confronting educational inequality

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.

References

Autor, David H., Lawrence F. Katz, and Melissa S. Kearney, "Rising Wage Inequality: The Role of Composition and Prices," NBER Technical Working Paper 11627, (Cambridge, MA: National Bureau of Economic Research, 2005).

Card, David, and Thomas Lemieux, "Dropout and Enrollment Trends in the Post-War Period: What Went Wrong in the 1970s?" in Risky Behavior among Youths: An Economic Analysis, J. Gruber, ed. (Chicago, IL: University of Chicago Press, 2001).

Ellwood, David T. “The sputtering labour force of the twenty-first century: Can social policy help?” In The Roaring Nineties: Can Full Employment Be Sustained? A. Krueger and R. Solow eds., 421-489. (New York: Russell Sage Foundation, 2001.)

Goldin, Claudia, and Lawrence F. Katz, "The 'Virtues' of the Past: Education in the First Hundred Years of the New Republic," NBER Working Papers 9958, (Cambridge, MA: National Bureau of Economic Research, Inc., 2003).

Goldin, Claudia, Lawrence F. Katz, and Ilyana Kuziemko, "The Homecoming of American College Women: The Reversal of the College Gender Gap," Journal of Economic Perspectives, 20 (2006), 133-156.

Greene, Jay P., "High School Graduation Rates in the United States," Center for Civic Innovation at the Manhattan Institute with Black Alliance for Educational Options Civic Report 31, (New York, 2001).

Heckman, James J. and Paul A. LaFontaine, “The American high school graduation rate: Trends and levels.” Working Paper 13670, National Bureau of Economic Research, (2007). Download from http://ftp.iza.org/dp3216.pdf.

Heckman, James J., and Paul LaFontaine, The GED and the Problem of Noncognitive Skills in America, (Chicago: University of Chicago Press, 2008) Forthcoming.

Heckman, James J., Lance J. Lochner, and Petra E. Todd, “Earnings functions and rates of return.” Journal of Human Capital, (2008), Forthcoming.

Miao, Jing, and Walt Haney, "High School Graduation Rates: Alternative Methods and Implications," Education Policy Analysis Archives, 12 (2004), 1-68.

Swanson, Christopher B., Who Graduates? Who Doesn't? A Statistical Portrait of Public High School Graduation, Class of 2001, (Washington, D.C: Urban Institute Education Policy Center, 2004).

Swanson, Christopher B., and Duncan Chaplin, "Counting High School Graduates when Graduates Count: Measuring Graduation Rates Under the High Stakes of NCLB," (Washington, DC: Urban Institute Education Policy Center, 2003).

Tyler, John H., and Jeffrey R. Kling, “Prison-Based Education and Re-entry into the Mainstream Labour Market,” In Barriers to Reentry? The Labour Market for Released Prisoners in Post- Industrial America Shawn Bushway, Michael Stoll, and David Weiman eds. (New York, Russell Sage Foundation Press, 2007).

Tyler, John H., and Magnus Lofstrom, “Modeling the Signaling Value of the GED With an Application in Texas,” Review of Research in Labour Economics. Forthcoming, 2008.

Warren, John R., "State-Level High School Completion Rates: Concepts, Measures, and Trends," Education Policy Analysis Archives, 13 (2005), 1-34.

Footnotes

1 See Autor, Katz, and Kearney (2005).

2 See Greene (2001), Swanson (2004), Swanson and Chaplin (2003), Miao and Haney (2004) and Warren (2005).

3 For a sample, see the heated debate in the popular press in May 2006

www.washingtonpost.com/wp-dyn/content/article/2006/05/22/AR2006052201187.html;

www.washingtonpost.com/wp-dyn/content/article/2006/05/22/AR2006052201197.html; www.washingtonpost.com/wp-dyn/content/article/2006/05/22/AR2006052201189.html.