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Author: Chuang, Hwei-Lin
Resulting in 1 citation.
1. Chuang, Hwei-Lin
An Estimable Dynamic Model of Schooling: An Application to High School Dropouts' Return to School
Ph.D. Dissertation, The Ohio State University, 1990. DAI-A 51/07, p. 2477, January 1991
Cohort(s): NLSY79
Publisher: UMI - University Microfilms, Bell and Howell Information and Learning
Keyword(s): Behavior; Dropouts; Educational Attainment; High School Dropouts; Teenagers; Wages; Wages, Reservation

This dissertation is an empirical study of high school dropouts' behavior, focusing on their decision on whether to return to school. High school dropouts are known to have poorer labor market prospects than high school graduates. However, being a dropout is not necessarily a permanent condition. The data used in this study indicated that about fifty percent of high school dropouts did return to school and more than seventy percent of these returners did complete high school education eventually. Our society could thus benefit from developing or improving policies or programs that encourage dropouts to return to school. This study can provide useful information to policy-makers toward this goal. A standard discrete-time search model developed in job search theory is modified to apply to youth's in-school/out-of-school decision behavior. This model is solved for the cases of normal and lognormal distributions of the error terms. The solutions suggest that there exists a 'reservation' wage rate such that if an in-school teenager observes a wage rate lower than his reservation wage rate then he will stay in school, otherwise he will choose to drop out of school. On the other hand, if an out-of-school teenager observes a wage rate lower than his reservation wage then he will return to school. Using the male sample drawn from the 1979 through 1986 annual waves of the National Longitudinal Survey of Labor Market Experience of Youth, the model is estimated within a maximum likelihood routine. The estimated mean wage is only a few cents per hour less than the mean of observed wages. The predicted hazard rates are decreasing with duration of staying out of school. That is, the general decline in the observed hazard rates is picked up by the model. However, the model is not acceptable according to the conventional test of goodness of fit. Estimating a structural model can provide means for evaluating the impact of potential policy instruments. For example, one of the simulation results indicates that increasing the employment probabilities reduces the reservation wage rates and therefore reduces the hazard of returning to school. Thus, a policy that successfully increases the employment probability for dropout teenagers might have the side effect of discouraging dropouts to return to school.
Bibliography Citation
Chuang, Hwei-Lin. An Estimable Dynamic Model of Schooling: An Application to High School Dropouts' Return to School. Ph.D. Dissertation, The Ohio State University, 1990. DAI-A 51/07, p. 2477, January 1991.