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Grade Retention and Unobserved Heterogeneity

 

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Type:   Article
 
Titre:   Grade Retention and Unobserved Heterogeneity
 
Auteur(s):   Gary-Bobo, Robert - Centre de Recherche en Économie et Statistique (CREST) (Auteur)
Gousse, Marion - Université Laval (Québec) (Auteur)
Robin, Jean-Marc - Département d'économie (Auteur)
 
In:   Quantitative Economics
 
Date de publication:   2016-11
 
Volume:   7
 
Numéro:   3
 
Pages:   781-820  p.
 
ISSN:   17597323
 
DOI:   http://dx.doi.org/10.3982/QE524
 
Mots-clés:   [en] Secondary education, Grade retention, Unobserved heterogeneity, Finite mixtures of normal distributions, Treatment effects, Class-size effects
 
JEL:   C23,  C36,  C38,  I2
 
Résumé:   [en] We study the treatment effect of grade retention using a panel of French junior high-school students, taking unobserved heterogeneity and the endogeneity of grade repetitions into account. We specify a multistage model of human-capital accumulation with a finite number of types representing unobserved individual characteristics. Class-size and latent student-performance indices are assumed to follow finite mixtures of normal distributions. Grade retention may increase or decrease the student’s knowledge capital in a type-dependent way. Our estimation results show that the average treatment effect on the treated (ATT) of grade retention on test scores is positive but small at the end of grade 9. Treatment effects are heterogeneous: we find that the ATT of grade retention is higher for the weakest students. We also show that class size is endogenous and tends to increase with unobserved student ability. The average treatment effect of grade retention is negative, again with the exception of the weakest group of students. Grade repetitions reduce the probability of access to grade 9 of all student types.
 
 

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