Black students score well below white students on a variety of standardized tests. (And the difference is associated with much of the black-white income later in life.) Control for income, and about half the gap disappears.
It?s a given in economics that a family?s standard of living depends much more on ?permanent income? (a long-run average income level) than it does on ?current income? (this year?s earnings). Jesse Rothstein and Nathan Wozny do a wonkmanlike job (I remind you:?around here ?wonk? is a term of high praise.) of putting together data on family permanent income and using this rather than current income as a conrol for measuring the black-white test gap. Control for permanent income in explaining black/white tests scores
cuts the gap in half.
In other words, the raw black-white gap is large. Controlling for current income the gap falls?in half, which is still uncomfortably large. Controlling for permanent income the gap falls in half again. This means the gap is a lot smaller than everyone?thought, although certainly still distressing.
Source: http://profitofeducation.org/?p=2685
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