The Determinants of Income Segregation and Intergenerational Mobility - Using Test Scores to Measure Undermatching

Sep 14, 2026

Uploaded by Franzy

We analyze how reallocating students to colleges would affect income-based segregation across colleges and intergenerational mobility in the United States. The study links administrative tax records on parents’ incomes with students’ earnings outcomes and combines these with SAT and ACT score data for each college. Equalizing application, admission, and matriculation rates conditional on test scores would substantially reduce segregation, mainly by increasing middleclass representation at selective colleges, though effects on elite private colleges for low-income students are limited. We also show that sliding-scale preferences could eliminate parental-income distribution differences, and that under a causal interpretation of observational gaps, these changes may reduce intergenerational income persistence among college students by about 25%.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages67

Reading Time2 h 49 min

AccessFree to download

Introduction

College allocation and intergenerational mobility

Measuring undermatching with test scores

Income segregation by parental income

Policy implications and causal interpretation

NBER WORKING PAPER SERIES THE DETERMINANTS OF INCOME SEGREGATION AND INTERGENERATIONAL MOBILITY: USING TEST SCORES TO MEASURE UNDERMATCHING Raj Chetty John N. Friedman Emmanuel Saez Nicholas Turner Danny Yagan Working Paper 26748 [http://www.nber.org/papers/w26748](http://www.nber.org/papers/w26748) NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 February 2020 This work was conducted under IRS contract TIRNO- 16-E-00013 and reviewed by the Office of Tax Analysis at the U.S. Treasury. We thank Joseph Altonji, David Deming, Eric Hanushek, Jess Howell, Michael Hurwitz, Lawrence Katz, David Lee, Richard Levin, Sean Reardon, anonymous referees, and numerous seminar participants for helpful comments; Trevor Bakker, Kaveh Danesh, Katie Donnelly Moran, Niklas Flamang, Robert Fluegge, Jamie Fogel, Benjamin Goldman, Clancy Green, Sam Karlin, Carl McPherson, Daniel Reuter, Benjamin Scuderi, Priyanka Shende, Jesse Silbert, Mandie Wahlers, and our other pre-doctoral fellows for outstanding research assistance; and especially Adam Looney for supporting this project. Chetty, Friedman, Saez, and Yagan acknowledge funding from the Russell Sage Foundation, the Bill & Melinda Gates Foundation, the Robert Wood Johnson Foundation, the Schmidt Futures Foundation, the Center for Equitable Growth at UC-Berkeley, the Washington Center for Equitable Growth, the UC Davis Center for Poverty Research, the Alfred P. Sloan Foundation, the Laura and John Arnold Foundation, the Chan-Zuckerberg Initiative, the Overdeck Foundation, and Bloomberg Philanthropies. The opinions expressed in this paper are those of the authors alone and do not necessarily reflect the views of the Internal Revenue Service, the U.S. Treasury Department, the Federal Reserve Board of Governors, the College Board, or the National Bureau of Economic Research. The results in this paper build on those reported in an earlier NBER working paper entitled “Mobility Report Cards: The Role of Colleges in Intergenerational Mobility.” A manuscript that combines the results from both papers is available at [https://opportunityinsights.org/wp-content/uploads/2020/02/coll_mrc_qje_paper.pdf](https://opportunityinsights.org/wp-content/uploads/2020/02/coll_mrc_qje_paper.pdf) and is forthcoming in the Quarterly Journal of Economics. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2020 by Raj Chetty, John N. Friedman, Emmanuel Saez, Nicholas Turner, and Danny Yagan. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. The Determinants of Income Segregation and Intergenerational Mobility: Using Test Scores to Measure Undermatching Raj Chetty, John N. Friedman, Emmanuel Saez, Nicholas Turner, and Danny Yagan NBER Working Paper No. 26748 February 2020, Revised June 2020 JEL No. J0 ABSTRACT We analyze how changes in the allocation of students to colleges would affect segregation by parental income across colleges and intergenerational mobility in the United States. We do so by linking data from tax records on parents' incomes and students' earnings outcomes for each college to data on students' SAT and ACT scores. We find that equalizing application, admission, and matriculation rates across parental income groups conditional on test scores would reduce segregation substantially, primarily by increasing the representation of middleclass students at more selective colleges. However, it would have little impact on the fraction of low-income students at elite private colleges because there are relatively few students from low-income families with sufficiently high SAT/ACT scores. Differences in parental income distributions across colleges could

FAQs

How does the paper measure undermatching when studying college allocation?

It links students’ earnings outcomes and parents’ incomes with each college’s SAT and ACT score data, using test scores to assess mismatches between students and college admissions pathways.

What does the paper find about equalizing admission rates across parental income groups?

Equalizing application, admission, and matriculation rates conditional on test scores would reduce segregation substantially, mainly by increasing middleclass students’ representation at more selective colleges.

Why would sliding-scale preferences be able to reduce differences in parental-income distributions across colleges?

The paper argues that giving low- and middle-income students a sliding-scale preference in application and admissions could eliminate distribution differences similar to the implicit advantage legacy students receive at elite private colleges.

Sep 14, 2026

Uploaded by Franzy