Abstract:
A general international observation is that adolescents from disadvantaged families
are more likely to leave school at age 16. In this paper we extend the literature on
school-leaving decisions by using a new and extensive panel data set from New
Zealand; and by examining the effect of family income, and personal and
environmental characteristics since childhood on both academic performance and
subsequent schooling choices. Results obtained from single equations and joint
estimation, allowing for possible endogeneity of academic performance, reveal the
importance of the role of academic performance in models of demand for education.
Several factors that are at work for a long time, such as household income at
different points in time, influence the schoolleaving decision through academic
performance. These results point to the role that stimulating academic performance
may play in breaking cycles of disadvantage.