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Education Subsidies and School Drop-Out Rates

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  • Lorraine Dearden
  • Carl Emmerson
  • Christine Frayne
  • Costas Meghir
  • Costas Meghir

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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Suggested Citation

  • Lorraine Dearden & Carl Emmerson & Christine Frayne & Costas Meghir & Costas Meghir, 2006. "Education Subsidies and School Drop-Out Rates," CEE Discussion Papers 0053, Centre for the Economics of Education, LSE.
  • Handle: RePEc:cep:ceedps:0053
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    References listed on IDEAS

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    1. 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.
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    5. 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 410-442, June.
    6. Costas Meghir & Mårten Palme, 2005. "Educational Reform, Ability, and Family Background," American Economic Review, American Economic Association, vol. 95(1), pages 414-424, March.
    7. Paul Johnson, 2004. "Education Policy in England," Oxford Review of Economic Policy, Oxford University Press, vol. 20(2), pages 173-197, Summer.
    8. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 261-294.
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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. Machin, Stephen & McNally, Sandra, 2008. "The literacy hour," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1441-1462, June.
    3. Smyth, Emer & McCoy, Selina, 2009. "Investing in Education: Combating Educational Disadvantage," Research Series, Economic and Social Research Institute (ESRI), number RS006.
    4. 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).
    5. Costas Meghir, 2006. "Dynamic models for policy evaluation," IFS Working Papers W06/08, Institute for Fiscal Studies.
    6. Morgenroth, Edgar & FitzGerald, John & FitzGerald, John, 2006. "Summary and Conclusions," Book Chapters,in: Morgenroth, Edgar (ed.), Ex-Ante Evaluation of the Investment Priorities for the National Development Plan 2007-2013, chapter 24, pages 317-333 Economic and Social Research Institute (ESRI).
      • Baker, Terence J. & FitzGerald, John & Honohan, Patrick & FitzGerald, John & Honohan, Patrick, 1996. "Summary and Conclusions," Book Chapters,in: Baker, Terence J. (ed.), Economic Implications for Ireland of EMU, chapter 12, pages 339-352 Economic and Social Research Institute (ESRI).
    7. 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).
    8. Pierre Lefebvre & Philip Merrigan, 2010. "Gender Gap in Dropping out of High School: Evidence from the Canadian NLSCY Youth," Cahiers de recherche 1044, CIRPEE.
    9. Carmen Aina, 2010. "The Determinants of Educational Attainment, University Drop-out and Time-to-Degree. A focus on Italy," Working Papers 132, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
    10. repec:eee:jfpoli:v:76:y:2018:i:c:p:44-55 is not listed on IDEAS
    11. Morgenroth, Edgar & FitzGerald, John & FitzGerald, John, 2006. "Productive Sector," Book Chapters,in: Morgenroth, Edgar (ed.), Ex-Ante Evaluation of the Investment Priorities for the National Development Plan 2007-2013, chapter 20, pages 257-277 Economic and Social Research Institute (ESRI).
    12. World Bank, 2008. "Kosovo - Youth in Jeopardy : Being Young, Unemployed, and Poor in Kosovo," World Bank Other Operational Studies 7895, The World Bank.
    13. Steve Machin & Anna Vignoles, 2005. "Education Policy in the UK," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(4), pages 64-74, 01.
    14. 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.
    15. Smyth, Emer & McCoy, Selina & Kingston, Gillian, 2015. "Learning from the Evaluation of DEIS," Research Series, Economic and Social Research Institute (ESRI), number RS39.
    16. Anna Christina D'Addio, 2007. "Intergenerational Transmission of Disadvantage: Mobility or Immobility Across Generations?," OECD Social, Employment and Migration Working Papers 52, OECD Publishing.
    17. Núria Rodríquez-Planas, 2010. "Longer-term Impacts of Mentoring, Educational Services, and Incentives to Learn: Evidence from a Randomized Trial in the United States," Working Papers 449, Barcelona Graduate School of Economics.
    18. Anderberg, Dan, 2013. "Post-compulsory education: Participation and politics," European Journal of Political Economy, Elsevier, vol. 29(C), pages 134-150.
    19. Carmen Aina, 2010. "University Drop-out in Italy," Working Papers 134, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.

    More about this item

    Keywords

    Education; School;

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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