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Closing the Gap? the Effect of Private Philanthropy on the Provision of African-American Schooling in the U.S

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Closing the Gap? the Effect of Private Philanthropy on the Provision of African-American Schooling in the U.S Journal of Public Economics 101 (2013) 53–67 Contents lists available at SciVerse ScienceDirect Journal of Public Economics journal homepage: www.elsevier.com/locate/jpube Closing the gap? The effect of private philanthropy on the provision of African-American schooling in the U.S. south☆ Celeste K. Carruthers a, Marianne H. Wanamaker b,⁎ a University of Tennessee, 702 Stokely Management Center, Knoxville, TN 37996-0570, United States b University of Tennessee, 524 Stokely Management Center, Knoxville, TN 37996-0550, United States article info abstract Article history: Long-run labor market inequities are frequently attributed to disparities in primary and secondary school Received 27 March 2012 quality, and philanthropists often resort to targeted and tightly conditioned gifts to address these quality dis- Received in revised form 1 February 2013 parities. We match data on the Rosenwald Schools Program, an early 20th century initiative aimed at the Accepted 11 February 2013 Southern black–white school quality gap, to newly assembled data on local school districts and measure Available online 21 February 2013 the impact of Rosenwald gifts on African-American public school resources. Although these gifts increased contemporaneous expenditures on African-American schools, results show that they yielded no lasting JEL classification: H41 change in multiple school quality proxies. Further, because Rosenwald funds were diverted or implicitly I22 matched to favor white schools, we find no evidence that the Fund reduced the black–white gap in superficial N32 school quality. We demonstrate, however, that overall black public education expenditures in this era had a steeper marginal effect on black attendance and literacy measures than white public expenditures had on Keywords: white outcome measures, which helps to explain why the Rosenwald program led to meaningful human cap- Education ital gains for black, but not white, individuals despite its failure to impact relative school quality. Achievement gap © 2013 Elsevier B.V. All rights reserved. Public goods Rosenwald Philanthropy 1. Introduction disadvantaged communities in their mission statements. These groups (and others) have frequently sought to ameliorate gaps in Education quality is a common target of modern philanthropic wages, employment rates, and cognitive ability measures by giving efforts. Relying on evidence that long-run labor market inequalities conditional grants or donations to underprivileged schools and can be attributed in large part to disparities in education provision, districts.1 some of the country's best known foundations, including the Bill & We measure the impact of such targeted grants on education provi- Melinda Gates Foundation and the William & Flora Hewlett Founda- sion in disadvantaged communities using an historical case study. In tion, include the advancement of educational achievement within the early years of the 20th century, the quality of education available to African-Americans in the U.S. South lagged far behind that available to whites.2 A number of private individuals sought to address this ☆ We are grateful for comments and suggestions from Michael Price, Don Bruce, William Hoyt, Brian Cadena, Choon Wang, Mary E. Hansen, Bruce Baker, anonymous referees, and 1 Estimates of the degree of inequality in black and white wages, employment rates, seminar participants at the University of Tennessee, the University of Kentucky Center and test scores vary, but the literature universally reports a sizable and statistically sig- for Poverty Research, the 2011 Southern Economic Association meetings, and the 2012 nificant gap. See Smith and Welch (1989), Altonji and Blank (1999), and others for la- Association for Education Finance and Policy meetings. Ye Gu, Andrew Moore, James bor market inequalities. See Fryer and Levitt (2004), Neal (2006), Card and Rothstein England, III, and Nicholas Busko provided outstanding research assistance. Donahue, (2007), and others for differences in test scores. Card and Krueger (1992), Dobbie Heckman and Todd graciously shared data for an earlier draft. Seed funding for this project and Fryer (2011) and Curto et al. (2011) all find that differences in school quality are was provided by the University of Tennessee Office of Research. Additional support in- significant factors in the achievement and labor market wage gaps for black students, cludes a grant from the Spencer Foundation, grant number 201200064, and a grant from both today and historically. Curto et al. (2011) further argue that changing the quality the University of Kentucky Center for Poverty Research via the U.S. Department of Health of schools is all that is required to close the modern gap in academic achievement and Human Services, Office of the Assistant Secretary for Planning and Evaluation, grant (although not necessarily labor market outcomes). Comparing initiatives that address number 5 U01 PE000002-06. The opinions and conclusions expressed herein are solely school quality (e.g., charter schools) with those addressing the community or home those of the authors and should not be construed as representing the opinion or policy environment, the authors find that the entirety of the gap can be addressed through of the Spencer Foundation, the U.S. Department of Health and Human Services, or any quality schooling. A related line of literature argues that labor market wage gaps are agency of the Federal Government. All errors are our own. largely explained by pre-market factors, including cognitive ability and labor market ⁎ Corresponding author. skills. See Neal and Johnson (1996). E-mail addresses: [email protected] (C.K. Carruthers), [email protected] 2 This is true for measures of spending per student, student/teacher ratios, term (M.H. Wanamaker). lengths and teacher salaries. See Margo (1990) and Donohue et al. (2002). 0047-2727/$ – see front matter © 2013 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.jpubeco.2013.02.003 54 C.K. Carruthers, M.H. Wanamaker / Journal of Public Economics 101 (2013) 53–67 disparity, and the largest source of private monies was the Julius in total spending, teachers, or facilities, and that they failed to narrow Rosenwald Fund. Between 1912 and 1933, Rosenwald bankrolled the the gap between white and black school quality. Other research indi- construction of nearly 5000 schools for black students across 15 cates that NAACP litigation and court-ordered desegregation were Southern states. The Fund left a very large footprint in the South — more effective in raising the relative quality of black schooling the 2012 value of all Rosenwald contributions to Southern school (Donohue et al., 2002; Reber, 2010, 2011), and even so, many parts enhancement is $23.1 million. By 1933 Rosenwald schools represented of the South remained effectively segregated several years after the 21% of all black schools and housed 24% of black teachers in the five Brown v. Board of Education ruling (Ashenfelter et al., 2006). Modern states we examine. philanthropists will be wise to expect crowd-out and diversion in Our study is motivated by seemingly contradictory observations response to donations, and monitoring and perfect enforcement of about Rosenwald-funded schools. First, recent evidence indicates grant stipulations may be prohibitively costly in a number of contexts. that Rosenwald's investments succeeded in changing the trajectory Nevertheless, our findings and those of Aaronson and Mazumder of black achievement, both in an absolute sense and relative to (2011) are suggestive of the potential power of conditional gifts. If phi- whites. Aaronson and Mazumder (2011) find that the Fund signifi- lanthropists are able to identify and affect areas with steeper marginal cantly increased educational attainment, school attendance, literacy, returns, they may achieve short-term and long-term objectives despite and cognitive test scores for African-American students while the fungibility of recipient resources. imparting no comparable advantage to whites. At the same time, however, Donohue et al. (2002) observe that there is little evidence of a narrowing of Georgia's black–white school quality gap in the 2. Historic and economic context Rosenwald era. Our study of five states, including Georgia, echoes this conclusion. Although African-American student–teacher ratios, The Rosenwald school-building program began in 1913 as a phil- term lengths, expenditures per pupil, and average teacher salaries anthropic partnership between Booker T. Washington, president of all improved over this period, these measures improved for whites the Tuskegee Institute in Alabama, and Julius Rosenwald, president as well, so much so that the ratio of black to white quality measures of Sears, Roebuck and Co. Following the successful construction of showed little change. So how could Rosenwald's targeted, large- six schools in rural farming communities surrounding Tuskegee, scale philanthropic spending have failed to affect the gap in black– Rosenwald agreed to expand the building campaign to other areas white school quality while significantly narrowing subsequent gaps of Alabama, and later, other states. The objectives of the nascent pro- in cognitive achievement? gram were to build better schoolhouses for rural black students and Using a newly-constructed panel data set of county-level education encourage longer term lengths and higher teacher salaries (Leavell, and Rosenwald Fund data, we find that Rosenwald monies indeed 1930). Management of the program shifted
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