Estimating the Impact of Grade Retention: A Heterogenous Analysis

Abstract

While the practice of grade retention is very widespread, previous research has consistently provided negative results regarding its impact. In this study, we execute a widespread analysis of the effects of retention, thereby specifically taking into account its endogenous and heterogenous nature. We execute an IV-estimation, using the strong correlation between month of birth and retention as an instrument, to assess the former and conduct a stepwise estimation method to deal with the latter. We thereby make a clear distinction between retention in kindergarten (Late Starts) and retention thereafter (Grade Retention). By looking at test scores at age 15, we find that the practice of Grade Retention is consistently bad for the whole distribution, while Late Starts do produce positive results for those at the lower end.