Under the educational sorting hypothesis a state compulsory school attendance law will increase the educational attainment of high-ability workers who are not directly affected hy the law. Under the human capital hypothesis such laws affect only those individuals whose hehavior is directly constrained. We find that compulsory attendance laws do increase enrollment rates in age groups they do not affect directly. Thus, our results contradict the human capital hypothesis and are consistent with the sorting hypothesis. I. INTRODUCTION The last decade has seen considerable debate between supporters of the human capital and sorting models of education. The former assert that the effect of education on wages reflects increased productivity. The latter maintain that it reflects, at least in part, correlation between education and unobserved ability. Workers use education to signal their ability, while employers use education to screen workers. Despite the importance of the debate, no fully convincing tests of the hypotheses have been developed. In fact, many members of the profession maintain (at least privately) that these hypotheses cannot be tested against each other and that the debate must therefore be relegated to the realm of ideology. In this paper we show that the models can be tested against each other by examining the effects of state compulsory school attendance laws. We show that under the human capital hypotheis, such laws will affect the educational attainment only of those who in the absence of the law would have left school prior to the minimum school leaving age. On the other hand, under the sorting hypothesis the effects of the law will percolate through the system, increasing educational attainment even among workers not directly constrained by the law. Our results are consistent with the predictions of the sorting model.