Non-Technical Summary:
Governments of many countries have reformed their compulsory schooling policies to increase the quantity of schooling of marginalized groups. Lifting the minimum school leaving age (MSLA) forces some children to stay in school longer than they would have stayed in the absence of such legislation. Although paternalistic in nature and costly to implement, restricting the choice set of children and their families is often justified by the objective of reducing social inequalities and harm associated with lower levels of education.
In this study, we analyze the wider consequences to society of increasing the MSLA using high quality nationally representative survey data – the Household, Income and Labour Dynamics in Australia Survey. We focus our analysis on estimating both the market (e.g., wages, labour supply, wealth) and non-market returns (e.g., cognitive and non-cognitive skills, marital quality, fertility, health) of reforms that raised MSLA in South Australia and Victoria during the 1960s.
Our findings suggest that these two MSLA reforms dramatically shifted the educational-attainment distribution during the 1960s. The reforms were particularly effective in improving educational attainment for women. They helped many girls to complete high school, and thus stay an additional three years in school. For boys, the effects were more mixed but the reform mostly kept them in school to complete year 10. In the long run, the reforms improved women’s older-age cognition, their wages, and their lifetime financial assets. Women also experienced higher quality marital matches, as measured by their lower divorce probabilities and better educated partners. For men, on the other hand, the reforms improved mainly their non-cognitive skills. Males who were forced to stay a year longer in school were more pro-social and developed stronger beliefs about their own control in life, and they were happier. Yet, their improved soft skills and happiness did not translate into higher wages and wealth.
Our research is highly policy relevant. We are the first to provide an overview of the long-term benefits to society of raising the MSLA of yet another year and how these affect men and women in different ways. Although tentative, our findings suggest that the non-market benefits may outweigh the high costs of forcing children at the margin, who would otherwise have left, to stay longer in school. MSLA reforms may also have led to female empowerment during a time when women were expected to be the homemaker or work in low-skilled professions.
An updated version of this paper has been published as de New SC, Schurer S and Sulzmaier D. (2021) Gender differences in the lifecycle benefits of compulsory schooling policies. European Economic Review, 140, 103910. DOI: 10.1016/j.euroecorev.2021.103910