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Modeling the economic effects of increased drop-out rates from high school

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  • Peter B. Dixon
  • Maureen T. Rimmer
  • Scott Farrow

Abstract

With Covid, high-school students are having difficulty staying in school. We present a dynamic model of the effects of increased drop-out rates. The model accounts for labor productivity, crime costs and high-school savings. We simulate a 25 per cent increase in drop-out rates occurring in the two years starting September 2019, with a gradual return to pre-Covid rates in 2025. Our results show a loss of 597,000 high-school graduations from cohorts entering high-school in 2016-2024. The present-value cost is between $42 and $137 billion, depending on discount rates. These results support investment in high-school retention policies through the Covid crisis.

Suggested Citation

  • Peter B. Dixon & Maureen T. Rimmer & Scott Farrow, 2021. "Modeling the economic effects of increased drop-out rates from high school," Centre of Policy Studies/IMPACT Centre Working Papers g-321, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-321
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    References listed on IDEAS

    as
    1. Scott Farrow, 2011. "Incorporating Equity in Regulatory and Benefit‐Cost Analysis Using Risk‐Based Preferences," Risk Analysis, John Wiley & Sons, vol. 31(6), pages 902-907, June.
    2. Michael Grossman, 2015. "The Relationship between Health and Schooling: What’s New?," NBER Working Papers 21609, National Bureau of Economic Research, Inc.
    3. Lance Lochner & Enrico Moretti, 2004. "The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports," American Economic Review, American Economic Association, vol. 94(1), pages 155-189, March.
    4. Aidan R. Vining & David L. Weimer, 2019. "The Value of High School Graduation in the United States: Per-Person Shadow Price Estimates for Use in Cost–Benefit Analysis," Administrative Sciences, MDPI, vol. 9(4), pages 1-15, October.
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    Keywords

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    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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