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Education subsidies and school drop-out rates

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Author Info

  • Lorraine Dearden

    ()
    (Institute for Fiscal Studies and Bedford Group, Institute of Education, University of London)

  • Carl Emmerson

    ()
    (Institute for Fiscal Studies)

  • Christine Frayne

    ()
    (Institute for Fiscal Studies and European Commission (formerly IFS staff))

  • Costas Meghir

    (Institute for Fiscal Studies and Yale University)

Abstract

This paper evaluates whether means-tested grants paid to secondary students are an effective way of reducing the proportion of school dropouts. We look at this problem using matching techniques on a pilot study carried out in England during 1999 and 2000 using a specially designed dataset that ensures that valid comparisons between our pilot and control areas are made. The impact of the subsidy is quite substantial with initial participation rates (at age 16/17) being around 4.5 percentage points higher. Full-time participation rates one year later are found to have increased by around 6.4 percentage points which is largely due to the EMA having a significant effect on retention in post compulsory education. These effects vary by eligibility group with those receiving the full payment having the largest initial increase in participation, whilst the effects for those who are partially eligible are only significantly different from the control group in the second year of the program. There is some evidence that the participation rate effect is stronger for boys, especially in the second year, and that the policy goes some way to reducing the gap in dropout rates between boys and girls. It is also clear that the policy has the largest impact on children from the poorest socio-economic background.

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Bibliographic Info

Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W05/11.

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Length: 41 pp.
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:ifs:ifsewp:05/11

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  1. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  2. James J. Heckman & Lance Lochner & Christopher Taber, 1999. "General Equilibrium Cost Benefit Analysis of Education and Tax Policies," NBER Working Papers 6881, National Bureau of Economic Research, Inc.
  3. Stacy Berg Dale & Alan Krueger, 1998. "Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables," Working Papers 788, Princeton University, Department of Economics, Industrial Relations Section..
  4. Costas Meghir & Mårten Palme, 2004. "Educational reform, ability and family background," IFS Working Papers W04/10, Institute for Fiscal Studies.
  5. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
  6. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
  7. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2005. "Evaluating the effect of education on earnings: models, methods and results from the National Child Development Survey," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(3), pages 473-512.
  8. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, vol. 85(5), pages 1278-86, December.
  9. Dynarski, Susan, 2001. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," Working Paper Series rwp01-034, Harvard University, John F. Kennedy School of Government.
  10. Paul Johnson, 2004. "Education Policy in England," Oxford Review of Economic Policy, Oxford University Press, vol. 20(2), pages 173-197, Summer.
  11. Stephen Cameron & Christopher Taber, 2000. "Borrowing Constraints and the Returns to Schooling," NBER Working Papers 7761, National Bureau of Economic Research, Inc.
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Cited by:
  1. Maarten Cornet & Free Huizinga & Bert Minne & Dinand Webbink, 2006. "Successful knowledge policies," CPB Memorandum 158, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Rodríguez-Planas, Núria, 2010. "Longer-Term Impacts of Mentoring, Educational Services, and Incentives to Learn: Evidence from a Randomized Trial," IZA Discussion Papers 4754, Institute for the Study of Labor (IZA).
  3. Steve Machin & Anna Vignoles, 2005. "Education Policy in the UK," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 3(4), pages 64-74, 01.
  4. Rodríguez-Planas, Núria, 2010. "Mentoring, Educational Services, and Economic Incentives: Longer-Term Evidence on Risky Behaviors from a Randomized Trial," IZA Discussion Papers 4968, Institute for the Study of Labor (IZA).
  5. Smyth, Emer & McCoy, Selina, 2009. "Investing in Education: Combating Educational Disadvantage," Research Series, Economic and Social Research Institute (ESRI), number RS006.
  6. Sandra McNally & Stephen Machin, 2004. "The Literacy Hour," Royal Economic Society Annual Conference 2004 43, Royal Economic Society.
  7. Anderberg, Dan, 2013. "Post-compulsory education: Participation and politics," European Journal of Political Economy, Elsevier, vol. 29(C), pages 134-150.
  8. World Bank, 2008. "Kosovo - Youth in Jeopardy : Being Young, Unemployed, and Poor in Kosovo," World Bank Other Operational Studies 7895, The World Bank.
  9. Costas Meghir, 2006. "Dynamic models for policy evaluation," IFS Working Papers W06/08, Institute for Fiscal Studies.
  10. Oreopoulos, Philip, 2007. "Do dropouts drop out too soon? Wealth, health and happiness from compulsory schooling," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2213-2229, December.
  11. Pierre Lefebvre & Philip Merrigan, 2010. "Gender Gap in Dropping out of High School: Evidence from the Canadian NLSCY Youth," Cahiers de recherche 1044, CIRPEE.

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