Learning about Academic Ability and the College Dropout Decision

Abstract

Research examining the educational attainment of low-income students has often focused on financial factors such as credit constraints. We use unique longitudinal data to provide direct evidence about a prominent alternative explanation—that departures from school arise as students learn about their academic ability or grade performance. Examining college dropout, we find that this explanation plays a very prominent role; our simulations indicate that dropout between the first and second years would be reduced by 40% if no learning occurred about grade performance/academic ability. The article also contributes directly to the understanding of gender differences in educational attainment.