The Long Run Human Capital and Economic Consequences of High-Stakes Examinations

38 Pages Posted: 3 Nov 2014 Last revised: 2 Jun 2023

See all articles by Victor Lavy

Victor Lavy

University of Warwick - Department of Economics; Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Avraham Ebenstein

Hebrew University of Jerusalem - Department of Economics

Sefi Roth

University of London - Royal Holloway College

Multiple version iconThere are 2 versions of this paper

Date Written: October 2014

Abstract

Cognitive performance during high-stakes exams can be affected by random disturbances that, even if transitory, may have permanent consequences for long-term schooling attainment and labor market outcomes. We evaluate this hypothesis among Israeli high school students who took a series of high stakes matriculation exams between 2000 and 2002. As a source of random (transitory) shocks to high- stakes matriculation test scores, we use exposure to ambient air pollution during the day of the exam. First, we document a significant and negative relationship between average PM2.5 exposure during exams and student composite scores, post-secondary educational attainment, and earnings during adulthood. Second, using PM2.5 as an instrument, we estimate a large economic return to each point on the exam and each additional year of post-secondary education. Third, we examine the return to exam scores and schooling across sub-populations, and find the largest effects among boys, better students, and children from higher socio-economic backgrounds. The results suggest that random disturbances during high-stakes examinations can have long-term consequences for schooling and labor market outcomes, while also highlighting the drawbacks of using high-stakes examinations in university admissions.

Suggested Citation

Lavy, Victor and Ebenstein, Avraham and Roth, Sefi, The Long Run Human Capital and Economic Consequences of High-Stakes Examinations (October 2014). NBER Working Paper No. w20647, Available at SSRN: https://ssrn.com/abstract=2518737

Victor Lavy (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3245 (Phone)
+972 2 581 6071 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Avraham Ebenstein

Hebrew University of Jerusalem - Department of Economics ( email )

Israel

Sefi Roth

University of London - Royal Holloway College ( email )

Senate House
Malet Street
London, TW20 0EX
United Kingdom

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