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Can information on the economic returns to schooling motivate students to stay in school?

Rafael de Hoyos's picture
Rafael and his classmates when they were in high school in Mexico.
Photo Credit: Rafael de Hoyos / World Bank

With Ciro Avitabile

If I could plot the number of bad decisions I’ve made throughout my life against my age there would certainly be a large hump between 15 and 18. Among the many bad decisions I made during adolescence—and believe me there were many- leaving school never even crossed my mind. To stay in high school, I not only had to be present but needed to put in a minimum effort not to fail more than a certain number of subjects which would jeopardize my right to enroll the following year.

Perhaps my decision to put some effort and stay in school was the outcome of inertia, family pressure and the influence of my peers (none of my friends in Monterrey, Mexico, where I’m from, dropped out) but part of it had to do with expectations. Surely, I did not run a wage equation to estimate the returns to schooling, but I had some evidence—mainly at home, through my dad, to believe that investing in education would pay off.

What many teenagers in Mexico are now facing is very different. Many of them have little or no family pressure or guidance and they see that one in every two of their peers drop out of high school. They don’t have information about the potential returns to education. When they do, it’s through a distorted perspective where they expect labor market returns lower than those observed. As a result, there is an under-investment in education in the form of less effort, less schooling, or both.

A potentially effective, low-cost, policy response is to better inform students about the returns to schooling. Following an influential study by Robert Jensen in 2009, the Mexican Secretariat of Public Education (SEP) designed and implemented an intervention to provide students in public, technical, high schools entering 10th grade information about the returns to high school and tertiary education.

The pilot program, known as Percepciones included an evaluation strategy, with 26 schools randomly assigned to the treatment group and 28 to the control group. In November 2009 the baseline data was collected and the information treatment was delivered. Students in treatment schools were given the following information (separately for men and women):

“In Mexico a man (woman) between 30 and 40 years old with a maximum education level of lower secondary earns, on average, $4,832 ($3,179) MX per month. A man (woman), ages 30 to 40, with an upper secondary diploma earns, on average, $6,466 ($4,827) MX per month, or $1,634 ($1,648) MX more per month. Therefore a man (woman) with an upper secondary diploma earns, on average, $784,320 ($791,040) MX more than those with a lower secondary degree throughout his (her) productive life.”

Students participating in the Percepciones pilot were identified, almost three years after, in ENLACE 12th grade. This is a census-based, standardized test implemented in May 2012. In a new paper, “The heterogeneous effect of information on student performance: evidence from a randomized control trial in Mexico” Ciro Avitabile and I measure the impact of information on high school graduation rates and test scores (in math and language subjects).

The baseline data shows that boys under-estimate incomes of high school graduates by 25% and girls by 35%, relative to the ones reported by the national employment survey (ENOE). Three years after the intervention, expected earning among students in the treatment group were closer to those reported by ENOE vis-à-vis the control.

Even if students raised their expectations, the intervention did not have a significant effect on high school graduation rates. However, the information treatment significantly improved learning outcomes, especially math test scores among girls and students from relatively better-off households (see figure below).

Figure 1: Treatment heterogeneity, standard deviations of ENLACE 12th grade
Note: effects are statistically significant at the 90 (*) and 95 (**) percent confidence level, respectively 

Why are test scores among relatively poor students not increasing (as a result of the information treatment)? Both low- and high-income students are increasing their (self-reported) effort as a result of the treatment, however, it seems that only those with adequate initial conditions, such as educated parents, can transform more effort into better outcomes.

Why are girls benefiting more than boys from the information treatment? Although both boys and girls in the treatment group update their beliefs regarding earnings of high school graduates, only girls increased their (self-reported) effort. There is some evidence that this difference is explained by girls valuing the future benefits associated with that effort more than boys do. In fact, as a result of the information treatment, a significant share of girls switched from biology-related tracks to the more math-intensive economics high school sub-tracks.

These results show that, unfortunately, a purely informational treatment is not an effective strategy to reduce upper secondary dropout rates in Mexico and is not enough to improve learning outcomes among students from disadvantaged backgrounds.

Given the positive effects on learning outcomes and the virtually zero cost of the intervention, information is still a highly cost-effective intervention. Information on returns to schooling can help many adolescent girls in Mexico visualize a future different from the traditional stereotypes and give more weight to the labor market implications of their schooling decisions.

An increase of 0.34 standard deviations in math test scores can have long term effects, improving girls’ labor market conditions. It can, perhaps, even help reduce the gender wage gap in Mexico. This is quite an impressive effect for just telling youth what most people assume they already know.      
Follow Rafael de Hoyos on Twitter at @rafadehoyos.
Find out more about World Bank Group education on Twitter and Flipboard.

​Read the feature story “Students improve their academic performance when they know how much they will earn”.
Download the report “The Heterogeneous effect of information on student performance : evidence from a randomized control trial in Mexico” .

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