I estimate a dynamic model of educational decisions. Students choose effort through the academic level of their program and the likelihood of performance. This differs from traditional approaches that assume performance follows an exogenous law of motion. I investigate high school tracking policies and obtain the following results: (1) encouraging underperforming students to switch to less academic programs reduces grade retention and dropout, (2) the decrease in the number of college graduates is small, and (3) in a traditional approach, we would ignore changes in unobserved study effort and find a large decrease in the number of college graduates.
high school curriculum; early tracking; dynamic discrete choice; CCP estimation;
- C61: Optimization Techniques • Programming Models • Dynamic Analysis
- I28: Government Policy
TSE Working Paper, n. 19-1002, March 2019, revised November 2019