Working Paper: CEPR ID: DP1861
Authors: Zvi Eckstein; Kenneth I. Wolpin
Abstract: The Fair Labour Standards Act (FLSA), impose restriction on working hours and the type of jobs held by minors at ages below 18. Hours worked in the National Longitudinal Survey of Youth (NLSY) sample increased monotonically from 2.5 for the 14-year-olds to 16.2 for the 18-year-olds, and among those who worked positive hours, it increased from 8.9 to 24.5. This evidence is, de facto, in compliance with the FLSA regulations on weekly hours. The aim of this paper is to assess one of the underlying premises for the legislation, namely that working while attending high school could adversely affect school performance. We formulate and estimate an explicit sequential decision model of high school attendance and work that captures in a stylized fashion the important institutional features of high school grade progression. Individuals accumulate credits (courses) towards graduation depending on the individual?s history of performance (knowledge acquisition), the level of participation in the labour market (hours worked) and their known (to them) ability and motivation. The labour market (randomly) offers wages for part-time and full-time employment that depend also on some inherent skill ?endowment? and labour market experience. The value of attending high school consists of both the perceived investment pay-off to graduation and on a current consumption value which is random. We simplify the model by assuming that a terminal condition for decisions during the high school period and its value can be estimated as an additional parameter of the model. Our results indicate that a policy that forced youths to remain in high school for five years or until they graduate, whichever comes first, without working would increase the number of high school graduates by slightly more than 2 percentage points (from 82% to 84.1%).
Keywords: academic performance; high school employment; maximum likelihood; heterogeneity
JEL Codes: J15; J20; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Working while attending high school (J24) | Academic performance (D29) |
| Policy forcing youths to remain in high school for five years (I21) | Number of high school graduates (I21) |
| Policy forcing youths to remain in high school for five years (I21) | Cumulative GPA of graduates (A23) |
| Lower school ability or motivation (D29) | Likelihood of dropping out of high school (I21) |
| Lower expected value of a high school diploma (I21) | Likelihood of dropping out of high school (I21) |
| Higher value placed on leisure (D46) | Likelihood of dropping out of high school (I21) |