Labor Market Opportunity Cost Pull
Observational StudyClinical Trial
Local expansions in low-skill formal job opportunities dramatically increase the immediate opportunity cost of remaining in school for adolescents on the dropout margin.
Picture this
When local factories open entry-level positions with immediate paychecks, high school students weigh immediate cash against delayed educational rewards. It resembles opening an exit door to an immediate food buffet next to a room where people are waiting for a complex meal to be cooked hours later; many choose to step out for immediate sustenance.
What the evidence says
Broad expansion in low-skill formal export manufacturing jobs substantially raised the probability of quitting upper secondary school for youth on the dropout margin at age 16.
- Who was studied
- National cohort of 16-year-old Mexican adolescents analyzed during export manufacturing growth periods.
- How
- Econometric analysis of local labor market shocks (Atkin 2016) evaluating school enrollment responses to export manufacturing expansion.
What to do
Identify regional low-skill job growth spikes and implement targeted retention subsidies or flexible work-study schedules for 16-year-old high school students.
From the source
"In particular, Atkin (2016) finds that the export manufacturing boom that Mexico experienced in the 1990s generated an abundance of new low-skill formal job opportunities which substantially raised the probability of quitting for youths on the dropout margin at age 16."
Addressing High School Dropouts with a Scalable Intervention: The Case of PODER