IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_12532.html

Graded for Life? Long-Run Impacts of High-Stakes Exam Thresholds

Author

Listed:
  • Petri Böckerman
  • Mika Haapanen
  • Christopher Jepsen
  • Hannu Karhunen

Abstract

We estimate the effect of receiving a higher grade on an academic high school exit exam on labor-market outcomes in adulthood. Identification is based on comparing students on different sides of grade cutoffs. Using nationwide Finnish register data, we find that better grades lead to higher income, although the effects are heterogeneous across the grade distribution. The largest and most precise income gains are concentrated among students in the middle of the grade scale. In contrast, we find little evidence of an income increase for those who barely passed, and the estimates for men with the highest grade are large but imprecise.

Suggested Citation

  • Petri Böckerman & Mika Haapanen & Christopher Jepsen & Hannu Karhunen, 2026. "Graded for Life? Long-Run Impacts of High-Stakes Exam Thresholds," CESifo Working Paper Series 12532, CESifo.
    • Handle: RePEc:ces:ceswps:_12532
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/cesifo1_wp12532.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Avraham Ebenstein & Victor Lavy & Sefi Roth, 2016. "The Long-Run Economic Consequences of High-Stakes Examinations: Evidence from Transitory Variation in Pollution," American Economic Journal: Applied Economics, American Economic Association, vol. 8(4), pages 36-65, October.
    2. Freier, Ronny & Schumann, Mathias & Siedler, Thomas, 2015. "The earnings returns to graduating with honors — Evidence from law graduates," Labour Economics, Elsevier, vol. 34(C), pages 39-50.
    3. Veronica Grembi & Tommaso Nannicini & Ugo Troiano, 2016. "Do Fiscal Rules Matter?," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 1-30, July.
    4. Serena Canaan & Pierre Mouganie, 2018. "Returns to Education Quality for Low-Skilled Students: Evidence from a Discontinuity," Journal of Labor Economics, University of Chicago Press, vol. 36(2), pages 395-436.
    5. Andrew Gelman & Guido Imbens, 2019. "Why High-Order Polynomials Should Not Be Used in Regression Discontinuity Designs," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(3), pages 447-456, July.
    6. Khoo, Pauline & Ost, Ben, 2018. "The effect of graduating with honors on earnings," Labour Economics, Elsevier, vol. 55(C), pages 149-162.
    7. Michela Carlana & Eliana La Ferrara & Paolo Pinotti, 2022. "Reply to: Comments on “Goals and Gaps: Educational Careers of Immigrant Children”," Econometrica, Econometric Society, vol. 90(1), pages 43-46, January.
    8. Michela Carlana & Eliana La Ferrara & Paolo Pinotti, 2022. "Goals and Gaps: Educational Careers of Immigrant Children," Econometrica, Econometric Society, vol. 90(1), pages 1-29, January.
    9. Brigham R. Frandsen, 2017. "Party Bias in Union Representation Elections: Testing for Manipulation in the Regression Discontinuity Design when the Running Variable is Discrete," Advances in Econometrics, in: Regression Discontinuity Designs, volume 38, pages 281-315, Emerald Group Publishing Limited.
    10. Feng, Andy & Graetz, Georg, 2017. "A question of degree: The effects of degree class on labor market outcomes," Economics of Education Review, Elsevier, vol. 61(C), pages 140-161.
    11. Michal Kolesár & Christoph Rothe, 2018. "Inference in Regression Discontinuity Designs with a Discrete Running Variable," American Economic Review, American Economic Association, vol. 108(8), pages 2277-2304, August.
    12. Anne Toft Hansen & Ulrik Hvidman & Hans Henrik Sievertsen, 2024. "Grades and Employer Learning," Journal of Labor Economics, University of Chicago Press, vol. 42(3), pages 659-682.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Machin, Stephen & McNally, Sandra & Ruiz-Valenzuela, Jenifer, 2020. "Entry through the narrow door: The costs of just failing high stakes exams," Journal of Public Economics, Elsevier, vol. 190(C).
    2. Salim Atay & Gunes A. Asik & Semih Tumen, 2024. "Impact of Graduating with Honours on Entry Wages of Economics Majors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 86(3), pages 606-640, June.
    3. Matias D. Cattaneo & Rocío Titiunik, 2022. "Regression Discontinuity Designs," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 821-851, August.
    4. Astruc--Le Souder, Mael & Bargain, Olivier & Locks, Gedeao, 2026. "A Question of Honor? The Labor Market Advantage of Academic Signaling," IZA Discussion Papers 18567, IZA Network @ LISER.
    5. Nibourel, Chloe & Folkestad, Mattias, 2025. "Starting young: How age limits shape political participation," European Journal of Political Economy, Elsevier, vol. 87(C).
    6. Adam C. Sales & Ben B. Hansen, 2020. "Limitless Regression Discontinuity," Journal of Educational and Behavioral Statistics, , vol. 45(2), pages 143-174, April.
    7. Cheng, Lingguo & Lu, Yunfeng, 2024. "Does retirement make people more risk averse?," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 135-155.
    8. Seonghoon Kim & Kanghyock Koh & Wonjun Lyou, 2024. "The effects of patient cost‐sharing on adolescents' healthcare utilization and financial risk protection: Evidence from South Korea," Economic Inquiry, Western Economic Association International, vol. 62(3), pages 1009-1023, July.
    9. Foged, Mette & Hasager, Linea & Peri, Giovanni & Arendt, Jacob Nielsen & Bolvig, Iben, 2023. "Intergenerational spillover effects of language training for refugees," Journal of Public Economics, Elsevier, vol. 220(C).
    10. Graetz, Georg, 2023. "Imperfect Signals," IZA Discussion Papers 16104, IZA Network @ LISER.
    11. Rosenqvist, Olof, 2024. "Reducing the gender gap in parental leave through economic incentives? – Evidence from the gender equality bonus in Sweden," Labour Economics, Elsevier, vol. 89(C).
    12. Tiago Cavalcanti & Kamiar Mohaddes & Hongyu Nian & Haitao Yin, 2023. "Air pollution and firm-level human capital, knowledge and innovation," Working Papers EPRG2301, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    13. Thomas Hofmarcher, 2021. "The effect of paid vacation on health: evidence from Sweden," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(3), pages 929-967, July.
    14. Selina Gangl & Martin Huber, 2025. "From homemakers to breadwinners? How mandatory kindergarten affects maternal labour market outcomes," Journal of Population Economics, Springer;European Society for Population Economics, vol. 38(2), pages 1-23, June.
    15. Brilli, Ylenia & Restrepo, Brandon J., 2020. "Birth weight, neonatal care, and infant mortality: Evidence from macrosomic babies," Economics & Human Biology, Elsevier, vol. 37(C).
    16. Schoner, Florian & Mergele, Lukas & Zierow, Larissa, 2024. "Grading student behavior," Labour Economics, Elsevier, vol. 90(C).
    17. Stijn Baert & Dieter Verhaest, 2021. "Work Hard or Play Hard? Degree Class, Student Leadership and Employment Opportunities," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(4), pages 1024-1047, August.
    18. Ayyagari, Padmaja & Salm, Martin & Sargent, Eric, 2026. "Can a Deductible Kill? The Effect of Patient Cost-Sharing on Health," IZA Discussion Papers 18420, IZA Network @ LISER.
    19. Georg Graetz, 2021. "On the interpretation of diploma wage effects estimated by regression discontinuity designs," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 228-258, February.
    20. Hannu Karhunen & Artturi Björk, 2019. "The long shadow of high stakes exams: Evidence from discontinuities," Working Papers 329, Työn ja talouden tutkimus LABORE, Labour Institute for Economic Research LABORE.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_12532. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.