New study shows that high school drop-out rates might be affected by income inequality.
Like teen girls who give birth, Kearney and Levine suggest that when boys see middle-class life as a distant possibility, they become discouraged and give up on school. While a little bit of inequality might motivate some students to study harder, a lot of it might kill their motivation entirely. Or, as the researchers put it a bit more technically, “a greater gap between the bottom and the middle of the income distribution might lead to a heightened sense of economic marginalization such that an adolescent at the bottom of the income distribution does not see much value in investing in his/her human capital.”
Kearney and Levine aren't offering definitive proof that "economic despair" is driving down graduation rates, nor do they claim to. Rather, they're offering a compelling explanation for a phenomenon that doesn't seem to be explained especially well by other data, and one that fits pretty well with common sense.