“Equalizing Opportunity Through Educational Finance Reform”

We analyze the reallocations of educational expenditures required to equalize opportunities, according to the theory of Roemer (1998). Using the NLSYM data set, we find that implementing an equal-opportunity policy across men of different races, by using educational finance as the instrument, and ensuring that no race received less than the average observed nationally, would require spending nine times as much on black students, per capita, as on white students. Equal-opportunity policies across men from different socio-economic backgrounds that ignores race does almost nothing to equalize opportunities across races. Raising the school-leaving age by one year, as opposed to increasing spending per pupil directly, is a relatively inexpensive way of reducing inequality of opportunity across races, but the reduction in opportunity inequality it achieves is very small. JEL categories: D63, I22, I28