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The Long-term Consequences of Teacher Discretion in Grading of High-stakes Tests

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  • Rebecca Diamond
  • Petra Persson

Abstract

We examine the long-term consequences of teacher discretion in grading of high-stakes tests. Bunching in Swedish math test score distributions reveal that teachers inflate students who have “a bad test day,” but do not to discriminate based on immigrant status or gender. By developing a new estimator, we show that receiving a higher grade leads to far-reaching educational and earnings benefits. Because grades do not directly raise human capital, these results emphasize that grades can signal to students and teachers within the educational system, and suggest important dynamic complementarities between students’ effort and their perception of their own ability.

Suggested Citation

  • Rebecca Diamond & Petra Persson, 2016. "The Long-term Consequences of Teacher Discretion in Grading of High-stakes Tests," NBER Working Papers 22207, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:22207
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    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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