Does school time matter? On the impact of compulsory education age on school dropout

A straightforward way to prevent students from leaving education without a higher secondary diploma consists of increasing the compulsory education age. By staying longer in school, the idea is that more students eventually obtain a higher secondary diploma. This paper examines by a difference-in-differences analysis the causal impact of a one-year increase in compulsory school-age on dropping out at secondary education.To do so, we exploit a recent compulsory education policy reform in the Netherlands. After controlling for confounding factors and observable covariates, significant results of about 2.5 percentage points fewer dropouts are found. The effect, however, is entirely situated in the student group non-liable to the policy reform. We observe that native Dutch vocational students, mostly without retention in grade, but also without a higher secondary diploma at hand, more often left school in the immediate period before the policy reform. Given the economic revival at that time, this fact may suggest anticipation on labor market opportunities.