Explaining the socio-economic status school completion gap

Relatively low rates of school completion among students from low socio-economic backgrounds is a key driver of intergenerational inequality. Linking data from the Programme for International Student Assessment with data from the Longitudinal Survey of Australian Youth, we use a decomposition framework to explain the gap in school completion rates by socio-economic status (SES). The two most important contributing factors are found to be lower educational aspirations of low SES students and their parents and lower numeracy and reading test scores at age 15. Differences in school characteristics by SES are estimated to be relatively unimportant.