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Do College-Bound High School Students Need an Extra Year? Evidence from Ontario’s ‘Double Cohort’

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  • Morin, Louis-Philippe

    () (University of Ottawa)

Abstract

The Local Average Treatment Effect (LATE) interpretation of the IV estimates of the returns to schooling is becoming increasingly popular. Typically, researchers reporting LATE estimates do not provide systematic evidence that there is substantial heterogeneity across different ability levels in returns, and without such evidence, the LATE interpretation is short of being compelling. The recent abolition of Grade 13 in Ontario’s secondary school system provides a unique opportunity to measure the benefits of an extra year of high school for high-ability students (those bound for college), rather than dropouts. I present a simple factor model which allows the value-added of Grade 13 (in terms of achievement) to be estimated, generalizing the standard difference-in-differences estimator to correct for heterogeneity in ability measurement across college subjects. The main finding is that the estimated return to an extra year of high school in terms of human capital is small for these high-ability students: students coming out of Grade 13 have a 2.2 point advantage (on a 100 point scale) over students from Grade 12, the estimated return to Grade 13 being around 2 percent. This evidence indicates that there is substantial heterogeneity in the return to an additional year of high school in the direction assumed in the prior literature.

Suggested Citation

  • Morin, Louis-Philippe, 2007. "Do College-Bound High School Students Need an Extra Year? Evidence from Ontario’s ‘Double Cohort’," IZA Discussion Papers 3098, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3098
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    References listed on IDEAS

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    1. Caroline M. Hoxby, 2000. "The Effects of Class Size on Student Achievement: New Evidence from Population Variation," The Quarterly Journal of Economics, Oxford University Press, vol. 115(4), pages 1239-1285.
    2. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, vol. 85(5), pages 1278-1286, December.
    3. Costas Meghir & Mårten Palme, 2005. "Educational Reform, Ability, and Family Background," American Economic Review, American Economic Association, vol. 95(1), pages 414-424, March.
    4. Baker, Michael, 1997. "Growth-Rate Heterogeneity and the Covariance Structure of Life-Cycle Earnings," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 338-375, April.
    5. Loury, Linda Datcher & Garman, David, 1995. "College Selectivity and Earnings," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 289-308, April.
    6. Lang, Kevin, 1993. "Ability Bias, Discount Rate Bias and the Return to Education," MPRA Paper 24651, University Library of Munich, Germany.
    7. Ethel B. Jones & John D. Jackson, 1990. "College Grades and Labor Market Rewards," Journal of Human Resources, University of Wisconsin Press, vol. 25(2), pages 253-266.
    8. Harmon, Harmon & Ian Walker, 1995. "Estimates of the economic return to schooling for the UK," IFS Working Papers W95/12, Institute for Fiscal Studies.
    9. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 533-575.
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    More about this item

    Keywords

    return to schooling; factor model; difference-in-differences;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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