How does compulsory school attendance affect students’ education and earnings?

Responsible researcher: Viviane Pires Ribeiro

Paper title: Does compulsory school attendance affect schooling and earnings?

Authors: Joshua D. Angrist and Alan B. Krueger

Intervention Location: United States

Sample Size: Not specified

Big theme: Education

Variable of Main Interest: School attendance

Type of Intervention: Analysis of the impact of compulsory education laws in the United States

Methodology: Ordinary Least Squares and Two-stage Least Squares

All developed countries have a mandatory education requirement, but little is known about the effect these laws have on educational attainment and earnings. Given this scenario, Angrist and Krueger (1991) establish that the date of birth is related to the level of education due to the minimum age policy for starting school and mandatory attendance laws. Individuals born at the beginning of the year start studying at an older age and, therefore, may leave school with less education than individuals born near the end of the year. Additionally, students who are required to attend school for a longer period receive higher salaries as a result of their extra schooling.

Assessment Context

If the fraction of students who wish to leave school before reaching the legal leaving age is constant across all birthdays, a student's birthday should be expected to influence his or her ultimate educational attainment. This relationship would be expected because, in the absence of continuous school admissions, students born in different months of the year start school at different ages. This fact, together with compulsory education laws, which force students to attend school until they reach a certain age, produces a correlation between date of birth and years of schooling.

Students born at the beginning of the calendar year are generally older when they enter school than those born later in the year. For example, the 1960 Census tabulation shows that, on average, boys born in the first quarter of the year enter first grade at age 6.45, while boys born in the fourth quarter enter first grade at age 6.07. This pattern arises because most school districts only admit students to first grade if they have reached the age of six by January 1 of the academic year in which they enter school. Consequently, students born at the beginning of the year are older when they enter school than students born near the end of the year.

As children born in the first quarter of the year enter school at an older age, they reach the legal leaving age after having attended school for a shorter period of time than those born towards the end of the year. Thus, if a fixed fraction of students is limited by the mandatory attendance law, those born at the beginning of the year will, on average, have less schooling than those born near the end of the year.

Intervention Details

The study carried out by Angrist and Krueger (1991) explores a natural experiment to estimate the impact of compulsory schooling laws in the United States. The experiment stems from the fact that children born in different months of the year start school at different ages, while compulsory schooling laws generally require students to remain in school until their sixteenth or seventeenth birthday. In effect, the interaction of school entry requirements and compulsory education laws force students born in certain months to attend school longer than students born in other months. Because one's birthday is unlikely to be correlated with personal attributes other than school entry age, date of birth generates exogenous variation in education that can be used to estimate the impact of compulsory schooling on education and earnings.

The study's empirical analysis draws on a variety of data sets, each set constructed from “Public Use Census Data” (or more specifically, Public Use Census Data). The sample used to calculate the main effects of quarter of birth on educational outcomes consists of all men born between 1930-1949 in the 5% sample of the 1980 Census. The sample used to calculate difference-in-differences estimates of the effect of compulsory schooling laws on enrollment consists of all sixteen-year-olds in each of the following Census samples: the 1% sample from the 1960 Census; the two 1% state samples from the 1970 Census; and the 5% sample from the 1980 Census. The two samples used to calculate the returns to education estimates consist of positive earnings males born between 1920-1929 in the three 1% samples from the 1970 Census, and the sample of income-positive men born between 1930-1949 in the 5% sample of the 1980 Census. Information on date of birth in Census is limited to the quarter of birth.

Methodology Details

Two methods were used to estimate the return to education: The Ordinary Least Squares (OLS) Method and the Two-Stage Least Squares (2SLS) Method. The OLS estimate is the education coefficient from a bivariate regression of log weekly wage on years of education. To improve estimation efficiency and control for age-related earnings trends, the authors estimated the 2SLS model. 2SLS estimates are used where the source of identification is variation in education that results solely from differences in date of birth – which in turn results from the effect of compulsory schooling laws.

The instruments excluded from the wage equation in the 2SLS estimates are three birth quarter dummies interacted with nine birth year dummies. Because birth year dummies are also included in the wage equations, the effect of education is identified by the variation in education between birth quarters in each birth year.

Results

Angrist and Krueger (1991) present an analysis of data from three decennial Censuses that establish that the date of birth is in fact related to the level of education. Notably, in virtually all birth cohorts that have been examined, children born in the first quarter of the year have a slightly lower average level of education than children born later in the year. School districts typically require that a student be six years old by January 1 of the year he or she enters school. Therefore, students born at the beginning of the year enter school at an older age and reach the legal leaving age earlier in their educational careers than students born at the end of the year. If the fraction of students who wish to leave school before the legal leaving age is independent of date of birth, then the observed seasonal pattern in education is consistent with the view that compulsory schooling restricts some students born later in the year to remain at school longer.

Two additional pieces of evidence link the seasonal pattern in education to the combined effect of school entry age and compulsory schooling laws. First, the seasonal pattern in education is not evident in college graduation rates, nor in graduate school completion rates. Because compulsory education laws do not force individuals to attend school beyond high school, this evidence supports the hypothesis that the relationship between years of schooling and date of birth is entirely due to compulsory education laws. Second, in comparing the enrollment rates of fifteen- and sixteen-year-olds in states that have a sixteen-year education requirement with the enrollment rates in states that have a seventeen-year education requirement, Angrist and Krueger (1991 ) found a greater decline in the enrollment of sixteen-year-olds in states that allow sixteen-year-olds to leave school than in states that force sixteen-year-olds to attend school.

The range of evidence presented by the authors establishes that compulsory schooling laws increase educational achievement for those covered by the laws. Thus, it is considered that students who attend school for longer, because of compulsory education, receive higher earnings as a result of their greater education. The results of two-stage least squares estimates suggest that men who are required to attend school by compulsory education laws receive higher wages due to their greater education. The estimated monetary return to an additional year of schooling for those who are required to attend school by compulsory schooling laws is about 7.5%, which is hardly different from the ordinary least squares estimate of the return to education for all male workers.

To verify whether the education-salary relationship is truly a result of compulsory education, the authors explored the relationship between income and date of birth for the subsample of graduates. Because these individuals were not constrained by compulsory schooling requirements, they form a natural control group to test whether date of birth affects earnings for reasons other than compulsory schooling. The results of this exploration suggest that there is no relationship between income and date of birth for men who are not limited by compulsory education. This reinforces the interpretation that the two-stage least squares estimate of the return to education reflects the effect of compulsory school attendance.

Public Policy Lessons

Angrist and Krueger (1991) argue that variation in education related to date of birth occurs because some individuals, by accident of date of birth, are forced to attend school longer than others because of compulsory schooling. Using season of birth as an instrument for education in an earnings equation, the authors found a striking similarity between Ordinary Least Squares and Two-Stage Least Squares estimates of the monetary return to education. Differences between estimates are typically not statistically significant, and any differences that exist tend to suggest that omitted variables, or measurement error in education, may induce a downward bias in the OLS estimate of the return to education. This evidence casts doubt on the importance of omitted variables bias in OLS estimates of the return to education, at least for years of schooling around compulsory schooling.

Therefore, the results provide support for the view that students who are required to attend school longer because of compulsory schooling laws receive higher wages as a result of their extra schooling. Furthermore, it was identified that compulsory education laws are effective in forcing some students to attend school.

References

ANGRIST, Joshua D.; KEUEGER, Alan B. Does compulsory school attendance affect schooling and earnings?. The Quarterly Journal of Economics , vol. 106, no. 4, p. 979-1014, 1991.