America’s got talent: The case for investing in public education

Key takeaways

• Public education made the U.S. the land of opportunity for generations of Americans in every key demographic.
• New research documents how public schooling broke the link between parental levels of educational achievement and income and their children’s futures, unleashing talent that would otherwise have gone untapped.
• The U.S. achieved near-universal primary school enrollment decades ahead of any other country, enabling it to become a leader in innovation, economic growth, and social mobility.
• Without renewed investment in universal schooling, America’s status as the land of opportunity is at risk.

The U.S. became the land of opportunity through deliberate investment in educating the masses. Before universal schooling, opportunity was distributed unevenly, leaving talent of unknown scale untapped.

History offers telling examples of how exceptional ability could flourish only when families found ways to overcome educational barriers. Before Katherine Johnson became a pathbreaking NASA mathematician in the 1950s, her parents moved 120 miles through the Jim Crow South just so she could attend high school. Thomas Edison might never have become a famous inventor in the late 19th century without his mother's determination to homeschool him after teachers dismissed him for lacking "the ability to think clearly." For every Johnson or Edison whose talent was cultivated by determined parents, countless other bright children likely remained trapped by circumstance.

This pattern of lost potential changed dramatically with America's pioneering expansion of universal schooling starting around 1900. New long-run evidence reveals that this expansion is a leading cause of the nation's democratization of education. By ensuring talented children could succeed regardless of their family circumstances, public schools proved instrumental in reducing the importance of parental background (and parental resolve, as Johnson’s story shows) in determining children's outcomes. As educational access grew, income mobility rose in tandem with human capital mobility.

Yet this success story has seen a troubling reversal. While intergenerational mobility increased from 1860 to 1950, in recent decades the American Dream has been fading. Only 50 percent of children born in 1980 earn more than their parents, compared with 90 percent of those born in 1940 (Chetty et al., 2017). Today, a child born into the bottom income quintile has a lower chance of reaching the top quintile in the U.S. than in many other developed nations, including France, the United Kingdom, Italy, and Sweden (Alesina et al., 2018).

Perhaps not coincidentally, over this same period, the U.S. has also lost its status as the world's leading investor in education: Several countries, including the Netherlands, Korea, Denmark, Norway, and Sweden, have already surpassed the U.S.’s investment in education of $11,500 per capita, and the gap has been growing (Bharti et al., 2025).

Today, U.S. public education is at a crossroads. Deep cuts in funding at the federal and state levels are looming even as new evidence underscores how fundamental universal schooling has been to the American Dream. This policy brief discusses what new and existing research reveals about public education’s central role in driving U.S. economic growth and enabling social mobility across race, ethnicity, and gender.

Policymakers face a critical decision: Does the U.S. continue to cut public school funding and risk its role as a global economic powerhouse or does it double down on public education and preserve economic mobility for generations to come?

The evidence is clear. Education is among the most profitable investments a government can make (Hendren and Sprung-Keyser, 2020). Without renewed investment in universal schooling, America risks losing its status as the land of opportunity.

How public schools broke the cycle of inherited disadvantage

New evidence from Althoff, Brookes Gray, and Reichardt (2025) reveals how mass public education enabled America to break the cycle of inherited disadvantage. We tracked census records of over 42 million American families from 1850 to 1950. In contrast to a decade’s worth of historical research using linked census records for men only, we combine census and administrative data (which include women's married and maiden names) to construct one of the first linked datasets with an equal number of men and women. Including women in our linked dataset allows us to track the evolving role of maternal human capital in determining children's outcomes.

FIGURE 1. Mobility across groups

The scale of the transformation induced by the spread of public education is striking. Before universal schooling, parents' education and income dominated children's life prospects in ways we are only now beginning to understand. If you knew a family's educational background and income in the mid-1800s, you could predict with 65 percent accuracy how the children’s education would compare with their peers’ — leaving little room for children with uneducated parents to climb the ladder.

Mothers' education was an especially powerful predictor of children's success. In an era when formal schooling was limited, mothers bore the primary responsibility for educating children. Even children who attended school did so for fewer than four months per year on average. As 19th-century educator Catharine Beecher observed, "The mother forms the character of the future man." Our data confirm this intuition: Maternal human capital was particularly important in determining children's outcomes where reliance on home education was higher due to limited public schooling. In contrast, our analysis finds that the role of fathers' human capital and income remained constant, highlighting the specific mechanism through which public schools democratized opportunity: replacing maternal homeschooling.

FIGURE 2. The rise of U.S. mass schooling

The expansion of schooling fundamentally altered this dynamic. As public schools spread, the importance of maternal human capital began to decline. For those born in the early 1900s, the ability to predict a child’s educational outcome based on their parents’ education level and income had dropped to around 35 percent — nearly half the predictive power compared with those born in the mid-1800s. During this same period, the share of children in school rose from below 60 percent to above 90 percent.

Crucially, this rise in intergenerational mobility was entirely driven by the shift from maternal home education to public schooling. When and where public schooling was widespread, maternal education lost its unique predictive power.

FIGURE 3. U.S. schools and the rise of human capital mobility

Causal evidence from compulsory schooling laws further supports this connection. Using the staggered implementation of these laws across states as a natural experiment, we find that a 10-percentage point increase in school attendance through mandatory schooling reduced the power that parental resources had to predict their children's educational outcomes by 9 percentage points. Compulsory schooling proved to be a powerful tool for breaking the link between parental background and children's outcomes.

The uneven path to opportunity: Lessons from different groups

While intergenerational mobility increased for all demographics from 1850 to 1950, the timing and magnitude of these gains varied dramatically.

FIGURE 4. U.S. racial differences in mobility patterns

Consider, for example, the experiences of Black versus white Americans. Black Americans initially experienced the most dramatic transformation. The abolition of slavery opened educational doors that had been sealed shut. Before abolition, learning to read and write was illegal for enslaved people in most Southern states. After the Civil War, newly freed slaves pursued education with remarkable intensity, and Black literacy rates soared over the following decades. During the Reconstruction era (1865-1877), so-called Freedmen's schools opened throughout the South, offering formal education to Black children for the first time in generations.

This demand for education translated into unprecedented social mobility for Black Americans. Our data show that Black children in the 1880s experienced the highest mobility rates of any group, as many of them gained access to education for the first time in generations after slavery ended. But over the decades that followed, Jim Crow laws severely limited Black educational opportunities. By the late 1800s, Southern states systematically reduced Black educational resources relative to white schools. As educational opportunities declined for Black Americans, so did their intergenerational mobility (see also Althoff and Reichardt, 2024). By 1920, Black mobility had fallen back below mobility for white children.

White Americans followed a different trajectory, experiencing their largest mobility gains around 1900, when formal schooling spread beyond the Northeast. Before mass schooling, white children's outcomes were tightly linked to their mothers' education. Intergenerational mobility remained low and stagnant until the end of the 19th century. Then, the rapid expansion of public schools weakened the constraints of maternal education. Mobility surged and peaked by 1920, with girls experiencing even greater increases than boys.

The similarly massive but differently timed mobility surges — for Black Americans following abolition in 1865 and for white Americans around the universal schooling expansion of 1900 — underscore a crucial lesson: Public schools served as America's great equalizer, but only where they were available to all. Where access was restricted by race, class, or gender, talent remained trapped.

America's fading educational leadership

From a global perspective, America's educational leadership was once unmatched. Throughout much of the 19th century, the U.S. spent more on education than almost any other country (Bharti et al., 2025). By 1900, close to 90 percent of American children attended primary school — a milestone European children wouldn't reach for another three decades. The world achieved this level of enrollment only by 2000, a full century after the U.S.

FIGURE 5. Global public school enrollment

This educational leadership built the foundation of America's role as the land of opportunity. The country that led in democratizing education also led in democratizing economic opportunity. However, this leadership position has steadily eroded.

While the U.S. remains among the top investors in public education, its standing has become less exceptional. Until around 1955, the U.S. was the world’s largest investor in public education on a per capita basis (Bharti et al., 2025). Since then, public school funding in the U.S. has steadily fallen. Over time, countries including the Netherlands, Denmark, Sweden, and Norway have overtaken the U.S. in their per-capita rate of investment in public education. European countries on average have grown educational spending consistently faster than the U.S. for the past decade. If these trends persist, the U.S.’s educational investments will continue to fall behind.

The consequences of this shifting landscape are already visible. Social mobility comparisons show that the American Dream has migrated elsewhere: American children are now less likely to go from "rags to riches" than many of their European peers (Alesina et al., 2018). The nation that once led the world in both educational investment and social mobility now lags behind.

The economic case for educational investment

Beyond its moral imperatives, education represents an extraordinary economic opportunity.

Government return-on-investment calculations show that education spending generates the highest fiscal returns of any public program. Recent research by Hendren and Sprung-Keyser (2020) examining the full range of government programs finds that "direct investments in low-income children's health and education have historically had the highest MVPFs [Marginal Value of Public Funds], on average exceeding 5." This means the benefits from such programs are five times higher than the net cost to the government, making them truly outstanding investments. In contrast, many other large government programs including job training, housing vouchers, or unemployment insurance tend to have marginal values of public funds below 1.

Moreover, many educational investments literally pay for themselves through increased tax revenues and reduced social costs. This is because educated workers earn more and are less likely to rely on government services like SNAP or Medicaid. No category of government spending comes close to the returns of programs that promote healthy and educated children (Hendren and Sprung-Keyser, 2020).

The economic benefits extend far beyond direct fiscal returns. Educational investments create powerful agglomeration effects that attract businesses and drive innovation (Glaeser, 2012). For example, educated workers join innovative firms; human capital concentration creates productivity spillovers as people who learn from each other become better at their jobs; and skilled communities gain the ability to constantly reinvent themselves economically. These multiplier effects make educational investment a cornerstone of regional economic development. It is also significant on a global level: Recent evidence suggests that rising education levels worldwide have accounted for almost half of the global economic growth that has been achieved over the past 40 years.

Reclaiming America's educational legacy

Linking America's leading role in delivering opportunity for all to its global pioneering role in mass education between 1850 and 1950 shows that deliberate policy choices were crucial to America’s emergence as the land of opportunity. By unlocking human potential regardless of background, America created one of the world's most dynamic economies.

Today, the country's status as the land of opportunity faces a critical juncture. Will the U.S. make the investments necessary to reclaim its status as the world’s leader in public education? To preserve its legacy as a leader in intergenerational mobility and to maintain its overall economic dynamism, America must recommit to investments in universal schooling. To do so, it must provide every child with the education needed to reach their full potential irrespective of parental background. The evidence is solid: This is one of the most profitable investments a nation can make.

References

Alesina, Alberto, Stefanie Stantcheva, and Edoardo Teso (2018). “Intergenerational Mobility and Preferences for Redistribution.” American Economic Review 108(2): 521-554.

Althoff, Lukas, Harriet Brookes Gray, and Hugo Reichardt (2025). “America's Rise in Human Capital Mobility.” Working Paper.

Althoff, Lukas, and Hugo Reichardt (2024). “Jim Crow and Black Economic Progress After Slavery.” Quarterly Journal of Economics 139(4): 2279-2330.

Bharti, Nitin, Amory Gethin, Thanasak Jenmana, Zhexun Mo, Thomas Piketty, and Li Yang (2025). “Human Capital, Unequal Opportunities and Productivity Convergence: A Global Historical Perspective, 1800-2100.” Working Paper.

Chetty, Raj, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, and Jimmy Narang (2017). “The Fading American Dream: Trends in Absolute Income Mobility Since 1940.” Science 356(6336): 398-406.

Gethin, Amory (2025), “Distributional Growth Accounting: Education and the Reduction of Global Poverty, 1980-2019.” Quarterly Journal of Economics, Forthcoming.

Glaeser, Edward L. (2012). “Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier.” Penguin Books.

Hendren, Nathaniel, and Ben Sprung-Keyser (2020). “A Unified Welfare Analysis of Government Policies.” Quarterly Journal of Economics 135(3): 1209-13