Coelli, Michael B. Green, David Alan Warburton, William P.
Year of Publication:
IFS Working Papers, Institute for Fiscal Studies (IFS) 04/14
We examine the impact of high school graduation on the probability individuals from welfare backgrounds use welfare themselves. Our data consists of administrative educational records for grade 12 students in a Canadian province linked with their own and their parents' welfare records. We address potential endogeneity problems by: 1) controlling for ability using past test scores; 2) using an instrument for graduation based on school principal fixed effects; and 3) using a Heckman- Singer type unobserved heterogeneity estimator. Graduation would reduce welfare receipt of dropoutsby Ý to 3/4. Effects are larger for individuals from troubled family backgrounds and low income neighbourhoods.