Working Paper: NBER ID: w10155
Authors: Philip Oreopoulos
Abstract: This paper studies high school dropout behavior by estimating the long-run consequences to leaving school early. I measure these consequences using changes in minimum school leaving ages often introduced to prevent dropping out and compare results across the United States, Canada, and the United Kingdom. Students compelled to stay in school experience substantial gains to lifetime wealth, health, and other labor market activities for all three countries, and these results hold up against a wide array of specification checks. I estimate dropping out one year later increases present value income by more than 10 times forgone earnings and more than 2 times the maximum lifetime annual wage. The one-year cost to attending high school would have to be extremely large to offset these gains under a model that views education as an investment. Other, sub-optimal, explanations for why dropouts forgo these benefits are considered.
Keywords: dropout behavior; school leaving laws; education; economic outcomes; health benefits
JEL Codes: I20; I21; I28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Compulsory schooling laws (I21) | Educational attainment (I21) |
| Educational attainment (I21) | Lifetime wealth (G51) |
| Educational attainment (I21) | Health outcomes (I14) |
| Educational attainment (I21) | Labor market activities (J29) |
| Educational attainment (I21) | Economic stability (E60) |