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The Information Value of Central School Exams

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  • Schwerdt, Guido

    (University of Konstanz)

  • Woessmann, Ludger

    (University of Munich)

Abstract

The central vs. local nature of high-school exit exam systems can have important repercussions on the labor market. By increasing the informational content of grades, central exams may improve the sorting of students by productivity. To test this, we exploit the unique German setting where students from states with and without central exams work on the same labor market. Our difference-in-difference model estimates whether the earnings difference between individuals with high and low grades differs between central and local exams. We find that the earnings premium for a one standard-deviation increase in high-school grades is indeed 6 percent when obtained on central exams but less than 2 percent when obtained on local exams. Choices of higher-education programs and of occupations do not appear major channels of this result.

Suggested Citation

  • Schwerdt, Guido & Woessmann, Ludger, 2015. "The Information Value of Central School Exams," IZA Discussion Papers 9122, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9122
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    Cited by:

    1. Puhani, Patrick A. & Yang, Philip, 2020. "Does increased teacher accountability decrease leniency in grading?," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 333-341.
    2. Ludger Woessmann, 2016. "The Importance of School Systems: Evidence from International Differences in Student Achievement," Journal of Economic Perspectives, American Economic Association, vol. 30(3), pages 3-32, Summer.
    3. Ludger Woessmann, 2018. "Central exit exams improve student outcomes," IZA World of Labor, Institute of Labor Economics (IZA), pages 419-419, January.
    4. Piopiunik, Marc & Schwerdt, Guido & Simon, Lisa & Woessmann, Ludger, 2020. "Skills, signals, and employability: An experimental investigation," European Economic Review, Elsevier, vol. 123(C).
    5. Stephan Maurer & Guido Schwerdt & Simon Wiederhold, 2023. "Do role models matter in large classes? New evidence on gender match effects in higher education," CEP Discussion Papers dp1896, Centre for Economic Performance, LSE.
    6. Potrafke, Niklas & Fischer, Mira & Ursprung, Heinrich, 2013. "Does the Field of Study Influence Students' Political Attitudes?," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79934, Verein für Socialpolitik / German Economic Association.
    7. Fischer, Mira & Kauder, Björn & Potrafke, Niklas & Ursprung, Heinrich W., 2017. "Support for free-market policies and reforms: Does the field of study influence students' political attitudes?," European Journal of Political Economy, Elsevier, vol. 48(C), pages 180-197.
    8. Leschnig, Lisa & Schwerdt, Guido & Zigova, Katarina, 2022. "Central exams and adult skills: Evidence from PIAAC," Economics of Education Review, Elsevier, vol. 90(C).
    9. Lisa Simon, 2019. "Microeconometric Analyses on Determinants of Individual Labour Market Outcomes," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 83.
    10. Lindov, Dalila, 2020. "Teachers and politics," European Journal of Political Economy, Elsevier, vol. 64(C).
    11. Seo, Chunghyeon & Kruis, Nathan E., 2022. "The impact of school’s security and restorative justice measures on school violence," Children and Youth Services Review, Elsevier, vol. 132(C).
    12. Maurer, Stephan & Schwerdt, Guido & Wiederhold, Simon, 2024. "Understanding Gender Match Effects in Higher Education: The Role of Class Size," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302339, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    central exit exams; labor-market sorting; earnings; measurement error; difference-in-difference; Germany;
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    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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