ࡱ> EGDM v8bjbj== (HWW\4lnnnnnnn~ ~ ~ 8 , "      Y[[[[[[$ \n     nn   &n n Y Y* nnY N ~ Bv%Y0-,  Ynnnn The Macro-Economic Impacts on Hispanic Dropouts: A Literature Review Eric Juenke 1/22/03 The impact of familial or individual economic characteristics on dropout rates is substantial. Controlling for the socio-economic status (SES) of families or individual students is basic to any serious investigation of dropout behavior. Both living in poverty and receiving government assistance contribute substantially to the likelihood of a child dropping out of school. While these micro-level influences have been thoroughly examined, macro-economic contexts are largely ignored, particularly as they pertain to Hispanic youth. In this review I will concentrate primarily on the literature that deals with the macro-economic environment and how it might adversely or differentially influence Hispanic teens. The theory of how these effects might be translated into deviant behavior is murky and at turns contradictory, so I will examine different explanations offered by past studies. Specifically I will focus on two main lines of inquiry: Indirect effects of general macro-economic changes through micro-level variation (as the economy takes a downturn, Hispanic families may be differentially affected, producing increased attrition). Here, we may learn from the literature dealing with poverty and its effects on Black students because of the similar socio-economic situation these groups often face. Labor market supply and demand variation. Hispanics may behave differently from Anglos and Blacks when faced with similar labor market conditions. This may be a direct effect of their perception of employment conditions and their familial responsibilities. Also included here are differing demands for education and differing returns to education between Hispanics and non-Hispanics. General Poverty Effects The general trend throughout these interrelated theories of macro-economic influence on attrition is that Hispanics do not appear to be directly affected by large-scale changes in economic conditions differently than other racial or ethnic groups. Rather, the differentiation comes from indirect influences through other school achievement measures (low grades and low feelings of efficacy for example) that contribute to the likelihood of dropping out. I begin with the first of these two theoretical effects because it is the most studied and accepted, then I move to the second theoretical strain that has been generally ignored, but provides an opportunity for us to contribute to the dropout literature. Haveman and Wolfe (1995) provide a good general picture of how economic changes might affect the dropout rates of students. Governments make policy decisions based on the macro-economic environment; specifically they may increase or decrease funding at the state level (or redistribute funds) based on economic conditions. Secondly, parents make schooling choices in the context of these government decisions; altering the amount of money they will privately invest in their children for example. Thirdly, students make choices about whether to stay in school or leave early based on their performance in class or based on non-school opportunities, these decisions being made in the context of the parental and governmental environment. Poor students are disadvantaged even when the economy is stable, and Hispanic students are more susceptible to the adverse effects described above because they are more likely to be from a poor family and live in a poor district. This is the general finding of every study reviewed here. Jana Jasinski (2000) uses individual data to find that family socioeconomic status has a negative and significant relationship on the probability of dropping out. Others making this connection include Ensminger and Slusarcick (1992) who also use individual level data focused solely on Blacks, Fetler (1989) using school level data, Velez (1989) analyzing individual level information, Fitzpatrick and Yoels (1992) using state level data, and Rumberger (1983, 1987) who uses state, school, and individual level data. The results are always consistently negative and significant; 1) students from poor families are more likely to drop out of school, 2) Hispanics are more likely to come from a poor family and 3) they are more likely than non-Hispanics to drop out. In a sense this finding is quite uninteresting, as most authors use socio-economic status as a control variable in studies that are focused on other phenomena. The chosen level of analysis is important for studying economic variability. Individual level studies can get at the strategic behavior and decision-making structure of the student. School and district level studies however are better for discussing policy choices of relevant governing bodies, while providing greater leverage on the question of macro-economic changes and how they trickle down through the bureaucracy. State level analyses are rare because they are theoretically tenuous, as much of the variation in dropout behavior is at the school or individual level. Opportunity for Research: Labor Market Changes and Supply and Demand Russell Rumberger gives the most succinct account of the labor market dropout theory: And there is at least some evidence to show that Hispanics may be more influenced to drop out by conditions in the community, notably work opportunities (1991, 75). The idea is that Hispanics (again, it is unclear if this is just a proxy for SES or if it is something differentially Hispanic) will choose to stay in school when the unemployment rate goes up and the job market is competitive. This makes intuitive sense and has been shown in numerous studies at various levels of analysis (Duncan, 1965; Rumberger, 1983; Rivkin, 1995; Rees and Mocan, 1997). Rees and Mocan look at dropout variation in New York school districts and find that after controlling for previously omitted variables, unemployment has uneven impacts on Hispanics and Blacks (1997, p. 107 column 3). They show that Black unemployment has a positive relationship to dropout behavior and Hispanic unemployment shows a negative relationship. Rivkin (1995) however reveals a negative relationship for Blacks, and Duncan finds a negative overall relationship for all students (1965). This conflicting evidence is at the heart of our inquiry. Why would Hispanics react differently than Blacks and Anglos to labor market conditions? We could gain a lot of ground here by specifically examining between-group differences. Rumberger (1983) offers one argument for differing results across studies. Hispanics (specifically males) may choose to leave school when the economy weakens because they have familial responsibilities that teens from other groups do not have (p. 201). He presents survey results from the NLS that appear to back up this claim; 13% of Hispanic male dropouts cite home responsibilities as their reason for leaving school (compared with 4% for Blacks and Anglos). Because of these differential responsibilities, they may leave school to get a job when unemployment increases so that they can supplement the family income. If so, we should find a positive relationship between the unemployment rate and Hispanic dropout behavior, something that has not shown up in empirical results. But clearly this is a neglected area of study and is a question that needs to be addressed. We could gain ground by looking at different labor markets (service vs. industry) or by looking at the diversity of the workforce and how group competition might account for the various results. Other areas in need of expansion are those dealing with the supply and demand of dropouts (or their converse, graduates). Koshal et al (1995) use district level data to show that low-income school districts have a lower demand for high school graduates, so they supply more dropouts. While their empirical model is less than desirable, they get the same general results as the studies reviewed at the beginning of this brief, and simply repackage them as demand and supply. They do provide a nice theoretical hook that needs specification for strict tests (as opposed to their general family income test). Mora (1997) similarly labels this effect opportunity cost differentiation. She also looks at SES differences and concludes that it is more expensive for Hispanics and Blacks to stay in school given non-education opportunities in the workforce. Specifically, particular groups pay higher relative costs to attend school. Mora argues that Hispanics and Blacks (in disproportionate numbers) rationally decide to bypass school when less costly opportunities present themselves (412-416). Lastly, we are interested in looking at how large-scale macro interventions might affect Hispanic families and their childrens choice to drop out of school. Orthner and Randolph (1999) use a duration model to look at the effect of welfare reform in 1996 on individual choices to drop out. This was a major piece of legislation that had profound effects on poor families, but Orthner and Randolph find that children from families who successfully moved off of the welfare roles were less likely to drop out of school relative to other families on welfare, but still more likely to drop out relative to middle class students (892-897). If Hispanics are more sensitive to major economic changes like this, then they should experience greater outcome impacts as well. These large intervention effects could be better addressed with time series data. To conclude, there is little work in this area, and it is ambiguous at best as to the behaviors of Hispanics in response to macro-level economic fluctuations. In order to gain leverage on this question, we should focus on: 1) labor market opportunity differences between Blacks, Anglos, and Hispanics, 2) supply and demand of graduates (hence dropouts) across variable economic environments, and 3) look specifically at differences among Latino groups (Puerto Ricans, Mexicans, and Cubans) in order to control for many of the family background characteristics previous studies ignore (see Jasinski 2000 and Velez 1989). Lastly, we should employ a dataset that captures over-time variation in order to increase the power of our tests. Bibliography Cohn, Elchanan and Terry Geske eds. 1990. The Economics of Education. New York: Pergamon Press. Duncan, Beverly. 1965. Dropouts and the Unemployed. The Journal of Political Economy 73: 121-134. Ensminger, Margaret E. and Anita L. Slusarcick. 1992. Paths to High School Graduation or Dropout: A Longitudinal Study of a First-Grade Cohort. Sociology of Education 65: 95- 113. Fetler, Mark. 1989. School Dropout Rates, Academic Performance, Size, and Poverty: Correlates of Educational Reform. Educational Evaluation and Policy Analysis 11: 109-116. Fitzpatrick, Kevin and Wiliam Yoels. 1992. Policy, School Structure and Socio-Demographic Effects on Statewide High School Dropout Rates. Sociology of Education 65: 76-93. Haveman, Robert and Barbara Wolfe. 1995. The Determinants of Childrens Attainments: A Review of Methods and Findings. Journal of Economic Literature 33: 1829-1878. Jasinski, Jana L. 2000. Beyond High School: An Examination of Hispanic Educational Attainment. Social Science Quarterly 81: 276-290. Koshal, Rajindar, Manjulika Koshal, and Beth Marino. 1995. High School Dropouts: A Case of Negatively Sloping Supply and Positively Sloping Demand Curves. Applied Economics 27: 751-757. McKay, Jack, Richard Dierkhising, Henry Eggert, Susan Evanich, Deirdre Milobar, Lori Swanson, Barry Tesch. 1993. The Holding Power Index: A Common Definition to Determine the School Dropout Rate. The High School Journal 76: 205-209. Mora, Marie. 1997. Attendance, Schooling Quality, and the Demand for Education of Mexican Americans, and Non-Hispanic Whites. Economics of Education Review 16: 407-418. Orthner, Dennis and Karen Rudolph. 1999. Welfare Reform and High School Dropout Patterns for Children. Children and Youth Services Review 21: 881-900. Rees, Daniel and Naci Mocan. 1997. Labor market Conditions and the High School Dropout Rate: Evidence from the New York State. Economics of Education Review 16: 103-109. Rivkin, Steven G. 1995. Black/White Differences in Schooling and Employment. Journal of Human Resources 30: 826-852. Rumberger, Russell. 1983. Dropping Out of High School: The Influence of Race, Sex, and Family Background. American Education Research Journal 20: 199-220. Rumberger, Russell. 1987. High School Dropouts: A Review of Issues and Evidence. Review of Educational Research 57: 101-121. Rumberger, Russell. 1991. Chicano Dropouts: A Review of Research and Policy Issues. Chapter in: Chicano School Failure and Success. Richard Valencia ed. London: Falmer Press. Valencia, Richard. 1991. The Plight of Chicano Students: An Overview of Schooling Conditions and Outcomes. In Chicano School failure and Success: research and Policy Agendas for the 1990s. Richard. Valencia ed. New York: Falmer Press. Velez, William. 1989. High School Attrition among Hispanic and Non-Hispanic White Youths. Sociology of Education 62: 119-133. 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