A1191
Title: If at first you don't succeed: A dynamic evaluation of grade retention
Authors: Hugo Reis - Banco de Portugal (Portugal) [presenting]
Abstract: Many European countries exhibit high rates of secondary school grade retention. The aim is to investigate the retention's effects on student learning, dropout rates, and educational attainment in Portugal - a country with some of the highest retention rates globally. To analyze these effects, an extended Roy model is developed and estimated that captures the cumulative impact of retention on test scores, dropout, and attainment across multiple grades. The findings reveal substantial heterogeneity in retention's effects on students' educational attainment and academic achievement. A negative consequence of Portugal's high rate of retention (>40\%) is that it significantly increases the likelihood of students dropping out of school, by 25 pp for the average retained student. However, for retained students who complete secondary school, 79\% experience test score gains in math and 45\% experience improvements in Portuguese. To assess model validity, the model is used to simulate retention effects on dropout for 12th-grade students at the margin of being retained and compare the predictions to regression discontinuity (RDD) estimates, which are found to be close. The estimated model is then used to solve for an optimal retention policy that maximizes average lifetime earnings, accounting for retention's countervailing effects on educational attainment and academic achievement.
