Walking the line: Does crossing a high stakes exam threshold matter for labour market outcomes?

This paper offers new insight into the link between success in high stakes exams and subsequent education and labour market outcomes. It is the first study to look at the impact of crossing an important high stakes threshold on both academic and vocational education choices and ultimately early career labour market outcomes. It does so by comparing those either side of an important threshold in the English education system at the end of compulsory schooling which was commonly regarded as the minimum benchmark for continuing into post-compulsory education. I find that crossing this threshold led to a 5.8-6.0 percentage point increase in the proportion of men and women continuing to the next education level. Crossing the threshold had a positive effect on earnings for women (3.4 percent) but not for men. The results for men can be explained by the fact that more marginal learners, who just crossed the threshold, were more likely to go on to low return academic qualifications, while those not crossing the threshold instead opted for relatively high return vocational education. I extend the analysis to other thresholds to test the uniqueness of the salience of this threshold on labour market outcomes (for women) and find that crossing other thresholds leads to better labour market outcomes. Equally, this can be explained by women crossing different thresholds leading to a greater likelihood of continuing in academic education, which has positive returns.