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How the Timing of Grade Retention Affects Outcomes: Identification and Estimation of Time-Varying Treatment Effects

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Abstract

Increasingly, grade retention is viewed as an important alternative to social promotion, yet evidence to date is unable to disentangle how the effect of grade retention varies by abilities and over time. The key challenge is differential selection of students into retention across grades and by abilities. Because existing quasi-experimental methods cannot address this question, we develop a new strategy that is a hybrid between a control function and a generalization of the fixed effects approach. Applying our method to nationally-representative, longitudinal data, we find evidence of dynamic selection into retention and that the treatment effect of retention varies considerably across grades and unobservable abilities of students. Our strategy can be applied more broadly to many time-varying or multiple treatment settings.

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File URL: http://economics.uwo.ca/cibc/workingpapers_docs/wp2011/Fruehwirth_Navarro_Takahashi07.pdf
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Bibliographic Info

Paper provided by University of Western Ontario, CIBC Centre for Human Capital and Productivity in its series University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers with number 20117.

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Date of creation: 2011
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Handle: RePEc:uwo:hcuwoc:20117

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Postal: CIBC Centre for Human Capital and Productivity, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2
Phone: 519-661-2111 Ext.85244
Web page: http://economics.uwo.ca/research/research_papers/cibc_workingpapers.html

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Keywords: time-varying treatments; dynamic selection; grade retention; factor analysis;

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References

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  1. Brian Jacob & Lars Lefgren, 2007. "The Effect of Grade Retention on High School Completion," NBER Working Papers 13514, National Bureau of Economic Research, Inc.
  2. Cattaneo, Matias D., 2010. "Efficient semiparametric estimation of multi-valued treatment effects under ignorability," Journal of Econometrics, Elsevier, vol. 155(2), pages 138-154, April.
  3. James J. Heckman & Sergio Urzua & Edward J. Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," NBER Working Papers 12574, National Bureau of Economic Research, Inc.
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  5. Stéphane Bonhomme & Jean-Marc Robin, 2010. "Generalized Non-Parametric Deconvolution with an Application to Earnings Dynamics," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 491-533.
  6. Pedro Carneiro & Karsten T. Hansen & James J. Heckman, 2003. "Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College," NBER Working Papers 9546, National Bureau of Economic Research, Inc.
  7. Cunha, Flavio & Heckman, James J. & Schennach, Susanne, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," IZA Discussion Papers 4702, Institute for the Study of Labor (IZA).
  8. Yingyao Hu & Susanne M. Schennach, 2008. "Instrumental Variable Treatment of Nonclassical Measurement Error Models," Econometrica, Econometric Society, vol. 76(1), pages 195-216, 01.
  9. Flavio Cunha & James Heckman & Salvador Navarro, 2005. "Separating uncertainty from heterogeneity in life cycle earnings," Oxford Economic Papers, Oxford University Press, vol. 57(2), pages 191-261, April.
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  11. James Heckman & Salvador Navarro-Lozano, 2004. "Using Matching, Instrumental Variables, and Control Functions to Estimate Economic Choice Models," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 30-57, February.
  12. Flavio Cunha & James J. Heckman & Salvador Navarro, 2007. "The Identification & Economic Content of Ordered Choice Models with Stochastic Thresholds," Working Papers 200726, Geary Institute, University College Dublin.
  13. Heckman, James J. & Navarro, Salvador, 2007. "Dynamic discrete choice and dynamic treatment effects," Journal of Econometrics, Elsevier, vol. 136(2), pages 341-396, February.
  14. S. A. Murphy, 2003. "Optimal dynamic treatment regimes," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 65(2), pages 331-355.
  15. Kelly Bedard & Elizabeth Dhuey, 2006. "The Persistence of Early Childhood Maturity: International Evidence of Long-Run Age Effects," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1437-1472, November.
  16. James J. Heckman & Jeffrey A. Smith, 1998. "Evaluating the Welfare State," NBER Working Papers 6542, National Bureau of Economic Research, Inc.
  17. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January.
  18. Cunha, Flavio & Heckman, James J. & Navarro, Salvador, 2007. "The Identification and Economic Content of Ordered Choice Models with Stochastic Thresholds," IZA Discussion Papers 2940, Institute for the Study of Labor (IZA).
  19. Stephanie Riegg Cellini & Fernando Ferreira & Jesse Rothstein, 2010. "The Value of School Facility Investments: Evidence from a Dynamic Regression Discontinuity Design," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 215-261, February.
  20. Rosa L. Matzkin, 2003. "Nonparametric Estimation of Nonadditive Random Functions," Econometrica, Econometric Society, vol. 71(5), pages 1339-1375, 09.
  21. Susanne M. Schennach, 2004. "Estimation of Nonlinear Models with Measurement Error," Econometrica, Econometric Society, vol. 72(1), pages 33-75, 01.
  22. Carneiro, Pedro & Hansen, Karsten T. & Heckman, James J., 2003. "Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College Choice," IZA Discussion Papers 767, Institute for the Study of Labor (IZA).
  23. Heckman, James J, 1990. "Varieties of Selection Bias," American Economic Review, American Economic Association, vol. 80(2), pages 313-18, May.
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Citations

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Cited by:
  1. Robert Gary-Bobo & Marion Gousse & Jean-Marc Robin, 2014. "Grade retention and unobserved heterogeneity," CeMMAP working papers CWP14/14, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  2. Baert, Stijn & Cockx, Bart, 2013. "Pure ethnic gaps in educational attainment and school to work transitions: When do they arise?," Economics of Education Review, Elsevier, vol. 36(C), pages 276-294.
  3. Mai Seki, 2013. "Heterogeneous Returns to U.S. College Selectivity and the Value of Graduate Degree Attainment," Working Papers 13-46, Bank of Canada.

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