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The Importance of Observing Early School Leaving and Usually Unobserved Background and Peer Characteristics in Analysing Academic Performance

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  • Guyonne Kalb

    () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Sholeh A. Maani

    (Department of Economics, The University of Auckland)

Abstract

In this paper, we use a recent panel data set from New Zealand to examine the link between the academic performance and the decision by teenagers to drop out of school before exams at the end of year 10. These choices have significant lifetime economic impacts, since early school leaving in many cases closes pathways to further education. We address endogeneity and error correlation of potential performance in national examinations and school-leaving choices prior to exams. Birth month provides an instrument used in the equation for drop out, because those born in particular months can legally leave school before the exam takes place, whereas the other students cannot. The analyses incorporate the effect of academic ability (childhood IQ), parental education, family resources at different points in time while the child is growing up, and school and peer characteristics. The results show that those who drop out early are unlikely to have performed well in the exam. The predicted difference between those who drop out or continue, at least up to their exam, is almost completely explained by observed factors. Leaving out those variables which are often not available in other datasets (such as childhood IQ, childhood family resources and teenage peer effects), we find that the unobserved factors in academic performance and early school leaving are correlated. It is found that beyond childhood IQ and family resources, teenage peer and school factors have additional and significant associations with grade outcomes. This has important policy implications.

Suggested Citation

  • Guyonne Kalb & Sholeh A. Maani, 2007. "The Importance of Observing Early School Leaving and Usually Unobserved Background and Peer Characteristics in Analysing Academic Performance," Melbourne Institute Working Paper Series wp2007n05, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2007n05
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2007n05.pdf
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    References listed on IDEAS

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    1. David M. Blau, 1999. "The Effect Of Income On Child Development," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 261-276, May.
    2. Card, David & Rothstein, Jesse, 2007. "Racial segregation and the black-white test score gap," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2158-2184, December.
    3. Maani, Sholeh A. & Kalb, Guyonne, 2007. "Academic performance, childhood economic resources, and the choice to leave school at age 16," Economics of Education Review, Elsevier, vol. 26(3), pages 361-374, June.
    4. Borland, Jeff & Wilkins, Roger, 1996. "Earnings Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 7-23, March.
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    6. Micklewright, John, 1989. "Choice at Sixteen," Economica, London School of Economics and Political Science, vol. 56(221), pages 25-39, February.
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    8. Feinstein, Leon & Symons, James, 1999. "Attainment in Secondary School," Oxford Economic Papers, Oxford University Press, vol. 51(2), pages 300-321, April.
    9. Rice, Patricia G, 1987. "The Demand for Post-compulsory Education in the UK and the Effects of Educational Maintenance Allowances," Economica, London School of Economics and Political Science, vol. 54(216), pages 465-475, November.
    10. Rothstein, J.M.Jesse M., 2004. "College performance predictions and the SAT," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 297-317.
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    Cited by:

    1. Leão Fernandes, Graça & Chagas Lopes, Margarida, 2008. "ISEG Undergraduate Students: Determinants of Academic Performance," MPRA Paper 22082, University Library of Munich, Germany.

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