AbstractColeman's (1988) theory of family social capital provides a conceptual framework for assessing the relationship between several dimensions of family structure and school dropout rates among nonmetro‐politan youth. This paper evaluates the extent to which higher rural than urban dropout rates are attributable to spatial differences in family structure (e.g., living arrangements, family size, and early childbearing) or economic resources (e.g., poverty) and estimates the differential effects of family structure and poverty on school dropout rates in nonmetropolitan areas, suburbs, and central cities. Data are drawn from the March 1990 Current Population Survey. Results indicate that residential differences in family structure account for a relatively small part of the higher dropout rates found in rural areas. Rural youth's experience with poverty appears to matter more. The educational effects of family structure are nevertheless strong in rural areas, albeit somewhat smaller than in suburban areas, owing perhaps to compensating forms of social capital found in rural areas. The results suggest that studies of dropout behavior—in rural or urban areas—must acknowledge the potentially large role of family structure and economic resources on the educational achievement pr