Bryan Caplan  

Are Rising Graduation Rates Good News? Two Theories, Four Answers

Henderson on Milton Friedman... There Is No Great Stagnation: ...
Like most people, Tyler Cowen thinks that rising high school graduation rates are good news:
The nation's high school graduation rate has risen -- to 78 percent in 2010, the Education Department says in its most recent estimate. That's obviously still not where it should be, but it's the highest figure since 1974. (For a long time, the rate was under 70 percent. After decades of stagnation, the graduation rate started to turn up in 2000, and the growth has been robust for more than a decade.)

On average, these additional high school graduates -- not to mention college degree recipients -- will find better jobs and enjoy better health, long-lasting benefits that will be reaped for many decades.

You might expect me to invoke the signaling model of education to rebuke him.  But in fact, neither the human capital nor the signaling model offers clear guidance here.  Both theories imply ambiguous evaluations.

In the pure human capital model, rising graduation rates are good if they reflect increased learning.  But they are not good if they reflect lower standards.  For all its faults, the human capital model is no rationale for social promotion - handing out diplomas based on age rather than performance.

In the pure signaling model, similarly, rising graduation rates are good if they reflect a rise in underlying worker productivity.  But they are not good if they stem from increased "investment" in education, higher subsidies, stricter compulsory attendance laws, or even skill-biased technological change.  (Skill-based technological change increases the return to ability, which in turn increases the incentive to signal your ability via education.  If the education does not actually increase your skill, this supply response is socially wasteful).

To know whether rising graduation rates are good news, then, you don't just need to know the relative importance of human capital and signaling.  You need to know why graduation rates went up in the first place.

COMMENTS (7 to date)

If graduation rates - and thus persistence of students through high school - went up while NAEP scores for 17-year-olds held steady, that might imply rising achievement.

My quick thoughts.

Glen S. McGhee writes:

The expansion of compulsory secondary education is a bad thing -- because it is compulsory.

It is also bad because it reflects lowered standards, a dumbing down of the curriculum.

It is also bad because it means that there is nothing better to do than to stay in school when there are no low paying jobs. It means, no jobs for the unskilled.

Also, there is nothing inherently good about a rise in underlying worker productivity -- this generally accrues to the corporations, by-passing the workers.

Steve Sailer writes:

In L.A., high school graduation rates were terrible up through 2007 because kids were dropping out to work. Since then, there have been no jobs, so they hang around school. The real test will be to wait through another economic cycle and see what happens.

Glen S. McGhee writes:

We'll see structural hysteresis.

Meaning, we will see kids staying in school well past the time they should have left (for various reasons), and their inability to enter the workforce for the first time (again, for various reasons).

Oh, and there are negative health effects too for leaving school. Yup.

"The health effects of leaving school in a bad economy" J. Catherine Maclean, Cornell University
January 10, 2012

MingoV writes:

Rising graduation rates often are due to fraud, not better schooling. Graduation rates often are a component of school district rankings. So, many school districts cheat. Example: 16-year-old Billy has not been to school for two weeks. The school does not send a truant officer to investigate. Instead, the school "assumes" that Billy has moved and is in a new school district. This assumption is maintained despite no request for Billy's transcript. In my area (suburbs east of Memphis), the graduation rates are 95%, a figure that all the high school students know is nonsense.

Glen S. McGhee writes:

Another reason that rising rates are bad -- more sheep to be sheared.

Hazel Meade writes:

My guess:
Rising graduation rates are a result of lower youth employment opportunities. In the past, a teenager might take a job and drop out of school. But now, there are no jobs for younger people so they stay in school.
In other words, teenagers are staying in school for the same reason college kids are staying in school. They are avoiding entering the labor force because their job prospects are dimmer.

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