Working Paper: NBER ID: w21640
Authors: Kala Krishna; Sergey Lychagin; Veronica Frisancho Robles
Abstract: Placement, both in university and in the civil service, according to performance in competitive exams is the norm in much of the world. Repeat taking of such exams is common despite the private and social costs it imposes. We develop and estimate a structural model of exam retaking using data from Turkey's university placement exam. We find that limiting retaking, though individually harmful given the equilibrium, actually increases expected welfare across the board. This result comes from a general equilibrium effect: retakers crowd the market and impose negative spillovers on others by raising acceptance cutoffs.
Keywords: exam retaking; welfare; general equilibrium; Turkey; high-stakes exams
JEL Codes: C35; I23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| limiting retaking (D45) | increases expected welfare overall (D69) |
| retakers crowd the market (R33) | raising acceptance cutoffs (C24) |
| retakers crowd the market (R33) | imposing negative spillovers on others (D62) |
| preventing retaking (A21) | most students tend to gain (I23) |
| preventing retaking (A21) | competition for placements decreases (J68) |
| competition for placements decreases (J68) | lower cutoff scores (C24) |
| banning retaking (Z28) | cutoff scores fall (C24) |
| banning retaking (Z28) | benefiting all students in the long run (I24) |
| low-ability students are more likely to retake (D29) | shifts the score distribution of retakers to the left (C46) |
| not controlling for selection (C34) | tends to underestimate learning (C51) |