“The White/Black Educational Gap, Stalled Progress, and the Long-Term Consequences of the Emergence of Crack Cocaine Markets” William N. Evans Craig Garthwaite Department of Economics Kellogg School of Management University of Notre Dame Northwestern University 437 Flanner Hall 2001 Sheridan Road Notre Dame, IN 46556 Evanston, IL 60208 vmail: (574) 631 7039 vmail: (202) 746 0990 email:
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[email protected] Timothy J. Moore Department of Economics George Washington University 2115 G Street, NW Washington, DC 20052 vmail: (301) 442 1785 email:
[email protected] Abstract February 2015 We propose the rise of crack cocaine markets as an explanation for the end to the convergence in black-white educational outcomes in the US that began in the mid-1980s. After constructing a measure to date the arrival of crack markets in cities and states, we show large increases in murder rates after these dates. Black high school completion rates also declined and we estimate that factors associated with crack markets and contemporaneous increases in incarceration rates can account for between 37 and 73 percent of the fall in black male high school completion rates. We argue that the primary mechanism is reduced educational investments in response to decreased returns to schooling. The authors thank Jen Brown, Shawn Bushway, Meghan Busse, Jon Caulkins, Amitabh Chandra, Kerwin Charles, Paul Heaton, Dan Hungerman, Melissa Kearney, Jon Meer, Richard Murnane, Derek Neal, Emily Oster, Rosalie Pacula, Peter Reuter, Bruce Sacerdote,