Budapest Working Papers on the Labour Market BWP - 2014/1
Using unique data from Hungary, we assess the gap in standardized test scores between Roma and non-Roma students and show that this gap is comparable to the size of the Black-White test score gap in the United States in the 1980s. The ethnic test score gap in Hungary is nearly entirely explained by social differences in income, wealth and parental education, while ethnic factors do not play an important role. Using reduced-form regressions, we identify two major mediating mechanisms: first, the home environment of Roma children is less favorable for their cognitive development; second, Roma children face a lower quality educational environment. Comparing children with similar home environments from the same school and class, we find that the ethnic gap in test scores is insignificant. Ethnic differences in the home environment are explained by social differences, and ethnicity seems to play no additional role. While their disadvantage in accessing high-quality education is also strongly related to social differences, Roma students seem to face additional disadvantages as subjects of ethnic segregation. The results suggest that in addition to policies designed to alleviate poverty, well-designed interventions influencing these mechanisms can also improve the skill development of Roma and other disadvantaged children.