Explaining the SES School Completion Gap

Relatively low rates of school completion among students from low socio-economic (SES) backgrounds is a key transmission mechanism for the persistence of intergenerational inequality. Using a rich dataset that links data from the Program for International Student Assessment (PISA) with data from the Longitudinal Survey of Australian Youth (LSAY), we use a decomposition framework to explain the gap in school completion between low and medium SES and between low and high SES. The two most important factors found to explain the gap are lower educational aspirations of low SES students and their parents (over 30% of the gaps) and lower numeracy and reading test scores at age 15 (over 20% of the gaps). Differences in the characteristics of schools (including resources, governance, teachers and peers) attended by low and higher SES students is estimated to be relatively unimportant, explaining only around 6% of the gaps.