My wife was briefly a teacher on an Indian reservation. There were few jobs on the reservation and many of the kids' parents were unemployed, and even the ones that were rarely were in a position that required any education. That's a huge demotivator for kids--why sacrifice for education when you can't see in front of your face that education might yield any benefits? Then there was, of course, the social ills associated with poverty, which distracted kids from school: alcoholism, drug abuse, crime, domestic violence, and sexual abuse.

I'm personally enormously skeptical of the idea that education is a solution to poverty,[1] at a large scale. There is a game theory problem in play. The fact is that it's unlikely that education will lift an individual inner city kid "out of the hood." A relatively excellent outcome for diligence and hard work would be going into debt to attend a third rate college, for the privilege of fighting for a low-paying service job. So it's totally rational for kids to be more preoccupied with whether joining the right gang will keep them from getting harassed on the way home from school.

But if everyone worked hard and got educated, what might happen is that economic opportunities could be created "in the hood." That's the prisoners dilemma--the individually rational decision to devalue diligence and education leads to a globally worse outcome. This is where culture comes in. You see this with poor immigrant communities. They have little capital, but have cultural mores that create an incentive for education and hard work. A kid might not leave the neighborhood through education, but he'll get social standing in the community, among authority figures and peers. When everyone has that incentive, that creates economic opportunities within the neighborhood. After all, there are neighborhoods in Bangladesh far poorer on an objective scale than the worst ghettos of Chicago, that nonetheless have bustling local economies.

[1] Poverty is, of course, relative. But I'm not talking about utopia, but just about raising the plight of the poor here in the U.S. up to that of some places in Western Europe.