The effects of test scores and truancy on youth unemployment and inactivity: a simultaneous equations approach

We analyse the relationships between test scores, truancy and labour market outcomes for youths. Our econometric approach enables us to disentangle the observable direct and indirect effects of truancy and test scores on the risk of unemployment or ‘Not in Education, Employment or Training’ (NEET) f...

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Bibliographic Details
Published in:Empirical economics 2020-10, Vol.59 (4), p.1799-1831
Main Authors: Bradley, Steve, Crouchley, Rob
Format: Article
Language:English
Subjects:
Econometrics
Economic models
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Education policy
Employment
Finance
Indirect effects
Inference
Insurance
Labor market
Management
Statistics for Business
Test scores
Truancy
Unemployment
Youth employment
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Summary:We analyse the relationships between test scores, truancy and labour market outcomes for youths. Our econometric approach enables us to disentangle the observable direct and indirect effects of truancy and test scores on the risk of unemployment or ‘Not in Education, Employment or Training’ (NEET) from their unobserved effects. Using data for England and Wales, we show that models of youth unemployment and NEET that ignore the correlation between the unobservable determinants of test scores and truancy will lead to misleading inference about the strength of their effects. Truancy has an indirect observed effect on labour market outcomes via its effect on test scores, and a weak direct effect. The unobserved component of truancy has a direct effect on labour market outcomes. Test scores have a direct effect on those outcomes, but also mitigate the detrimental effects of truancy. Our analysis raises important implications for education policy.
ISSN:0377-7332
1435-8921
DOI:10.1007/s00181-019-01691-8