By David Phillips, Associate Research Professor of Economics
LEO announces a new working paper: The Labor Market Return to Reversing High School Dropout.
Adults who dropped out of high school enroll at The Goodwill Excel Center. Graduates get the same high school diploma I have. Five years later, their earnings have increased by 39%.
Most people who drop out of high school do not get a full high school diploma, or even a chance at one. In many states, adults cannot legally get a high school diploma. Test-based credentials like the GED take their place. But often those alternatives have low returns.
The Excel Center addresses a number of barriers to graduation: matching coursework to the student, shorter terms and alternate class schedules, free on-site childcare, transportation assistance, and life coaches. This gets students who dropped out before a second chance at a diploma.
In LEO's study, we compare changes in earnings of graduates to both students who enrolled in The Excel Center but exited before graduating and applicants who applied but did not enroll. Earnings are 39% higher for graduates, nearly all from graduating vs. enrolling.
Selection on post-enrollment shocks is unlikely to drive observed differences in earnings. Similar results if we compare to positively selected groups: students who exit to get a job, students who persist for many terms. Similar results on assignment to remediation IV.
What we're finding differs starkly from the evidence on the GED. Returns to the GED are typically found to be low to zero. The Excel Center gets a different result by aiming for a full diploma and providing intensive supports.
New skills seem to be a big part of why a diploma is better. The Excel Center grads get more certifications and community college credits, particularly in healthcare. Their employment shifts from restaurants, hotels, and temp agencies to healthcare jobs.
We're an optimistic counterpoint to the view that educational programs only matter in early childhood. With supports to address costs/complexity of returning to high school, adults who previously dropped out can complete a diploma and reap its large labor market returns.
We are thankful to our partners at Goodwill of Central & Southern Indiana. This project also benefits from the great administrative data available from the Indiana Management Performance Hub.