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Ability, Parental Valuation of Education and the High School Dropout Decision

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  • Foley, Kelly
  • Gallipoli, Giovanni
  • Green, David A.

Abstract

We use a large, rich Canadian micro-level dataset to examine the channels through which family socio-economic status and unobservable characteristics affect children's decisions to drop out of high school. First, we document the strength of observable socio-economic factors: our data suggest that teenage boys with two parents who are themselves high school dropouts have a 16% chance of dropping out, compared to a dropout rate of less than 1% for boys whose parents both have a university degree. We examine the channels through which this socio-economic gradient arises using an extended version of the factor model set out in Carneiro, Hansen, and Heckman (2003). Specifically, we consider the impact of cognitive and non-cognitive ability and the value that parents place on education. Our results support three main conclusions. First, cognitive ability at age 15 has a substantial impact on dropping out. Second, parental valuation of education has an impact of approximately the same size as cognitive ability effects for medium and low ability teenagers. A low ability teenager has a probability of dropping out of approximately .03 if his parents place a high value on education but .36 if their education valuation is low. Third, parental education has no direct effect on dropping out once we control for ability and parental valuation of education. Our results point to the importance of whatever determines ability at age 15 (including, potentially, early childhood interventions) and of parental valuation of education during the teenage years. We also make a small methodological contribution by extending the standard factor based estimator to allow a non-linear relationship between the factors and a covariate of interest. We show that allowing for non-linearities has a substantial impact on estimated effects.

Suggested Citation

  • Foley, Kelly & Gallipoli, Giovanni & Green, David A., 2010. "Ability, Parental Valuation of Education and the High School Dropout Decision," CLSSRN working papers clsrn_admin-2010-14, Vancouver School of Economics, revised 30 Apr 2010.
  • Handle: RePEc:ubc:clssrn:clsrn_admin-2010-14
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    Cited by:

    1. Michael J. Kottelenberg & Steven F. Lehrer, 2019. "How Skills and Parental Valuation of Education Influence Human Capital Acquisition and Early Labor Market Return to Human Capital in Canada," Journal of Labor Economics, University of Chicago Press, vol. 37(S2), pages 735-778.
    2. Christofides, Louis N. & Hoy, Michael & Milla, Joniada & Stengos, Thanasis, 2012. "Grades, Aspirations and Post-Secondary Education Outcomes," IZA Discussion Papers 6867, Institute of Labor Economics (IZA).
    3. Kunz, Johannes S. & Staub, Kevin E., 2020. "Early subjective completion beliefs and the demand for post-secondary education," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 34-55.
    4. Falch, Torberg & Strøm, Bjarne, 2013. "Schools, ability, and the socioeconomic gradient in education choices," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 43(C), pages 49-59.
    5. Kelly Foley, 2019. "The gender gap in university enrolment: Do parents play a role beyond investing in skills?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(2), pages 441-489, May.
    6. Foley, Kelly, 2017. "The gender gap in university participation: What role do skills and parents play?," CLEF Working Paper Series 8, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    7. Green, David & Kesselman, Jonathan Rhys & Tedds, Lindsay M., 2021. "Covering All the Basics: Reforms for a More Just Society," MPRA Paper 105902, University Library of Munich, Germany.
    8. Garnett Picot & Feng Hou, 2013. "Why Immigrant Background Matters for University Participation: A Comparison of Switzerland and Canada," International Migration Review, Wiley Blackwell, vol. 47(3), pages 612-642, September.
    9. Nicholas Trachter, 2015. "Stepping stone and option value in a model of postsecondary education," Quantitative Economics, Econometric Society, vol. 6(1), pages 223-256, March.
    10. Falch, Torberg & Lujala, Päivi & Strøm, Bjarne, 2013. "Geographical constraints and educational attainment," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 164-176.
    11. Johannes S. Kunz & Kevin E. Staub, 2016. "Subjective completion beliefs and the demand for post-secondary education," Economics of Education Working Paper Series 0120, University of Zurich, Department of Business Administration (IBW).
    12. Donna Feir, 2015. "The Intergenerational Effect of Forcible Assimilation Policy on Education," Department Discussion Papers 1501, Department of Economics, University of Victoria.
    13. Coelli, Michael & Green, David A., 2012. "Leadership effects: school principals and student outcomes," Economics of Education Review, Elsevier, vol. 31(1), pages 92-109.
    14. Bertoni, Eleonora & Di Maio, Michele & Molini, Vasco & Nisticò, Roberto, 2019. "Education is forbidden: The effect of the Boko Haram conflict on education in North-East Nigeria," Journal of Development Economics, Elsevier, vol. 141(C).
    15. Louis N. Christofides & Michael Hoy & Joniada Milla & Thanasis Stengos, 2012. "The Implication of Peer and Parental Influences on University Attendance: A Gender Comparison," Working Papers 1201, University of Guelph, Department of Economics and Finance.
    16. Hou, Feng & Picot, Garnett, 2013. "Why Immigrant Background Matters for University Participation: A Comparison of Switzerland and Canada," CLSSRN working papers clsrn_admin-2013-50, Vancouver School of Economics, revised 22 Nov 2013.

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    More about this item

    Keywords

    Idiosyncratic Shocks; Disability; Insurance; Marriage;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of 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
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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