The White/Black Educational Gap, Stalled Progress, and the Long Term Consequences of the Crack Epidemic

We propose the rise of crack cocaine as an explanation for the end to the convergence in black-white educational outcomes beginning in the mid-1980s. After constructing a measure of the arrival of crack arrival in cities and states, we first show there are large increases in incarceration and murder rates after the arrival of the drug. We show that the emergence of crack accounts for between 39 and 71 percent of the fall in black male high school graduation rates. The results suggest that, in line with human capital theory, educational investments declined in response to decreased returns to schooling.