High School Dropouts: Individual Economic Cost and The Role of the GED as a Potential Factor

1. High School Dropouts: Individual Economic Cost and The Role of the GED as a Potential Factor Magnus Lofstrom University of Texas at Dallas

4. Lifetime Earnings by Schooling – Men (2000 Census)

5. Lifetime Earnings by Schooling – Women (2000 Census)

6. Annual Earnings Premium, Relative to Dropouts, Men, Ages 25-65, (2000 Census)

7. Annual Earnings Premium, Relative to Dropouts, Women, Ages 25-65, (2000 Census)

8. Does the GED Credentialing Program Encourage Students to Drop Out ofHigh School?Evidence from Texas Magnus Lofstrom University of Texas at Dallas John Tyler Brown University and NBER

9. Motivation Concern over the “dropout” problem - GED Some students may substitute GED for HS diploma “True” dropout rates and trends are masked by GED holders Concern related to size of the GED program

12. Motivation Concern over the “dropout” problem Some students may substitute GED for HS diploma “True” dropout rates and trends are masked by GED holders Concern related to size of the GED program GEDs are less successful in the labor market than HS grads

13. The Dropout Decision and The GED The rational decision-making student: Compares benefits and costs of options ? PDV net benefits HS diploma vs PDV net benefits of dropping out Student also weighs GED costs and benefits The myopic student/potential dropout Aware of “costs” – difficulty obtain/pass GED Either case; Making it harder to pass GED exams ? increases “costs”/difficulty of obtaining GED ? decreases dropout probability

14. GED passing standard change in Texas Edict from ACE: January 1, 1997 change Texas goes from lowest passing standard (40 on each test or 45 mean score) to… Highest passing standard(40 on each test and 45 mean score) 15 percent of 16-20 year-old 1997 testers who failed would have passed under old standard

18. Discrete Time Hazard Model

19. Estimated Differences in Conditional Dropout Probability by Age, Pre- and Post-1997 GED Passing Standard Increase

20. Summary and Conclusions Preliminary findings The increase in the GED passing standard may have affected some students dropout decision Older students, ages 18 to 20, are relatively less likely to dropout in the post-period

21. Summary and Conclusions Preliminary findings Unintended Consequences Results suggest that the presence of the GED credential may induce some students to dropout of high school Important benefit arising from ACE’s decision to raise the minimum passing standard potentially increased educational attainment among potential dropouts