SMU SOE Seminar (Oct 11, 2017): The Effect of Grade Retention on Adult Crime: Evidence from a Test-Based Promotion Policy

This paper presents the first analysis in the literature of the effect of test-based grade retention on adult criminal convictions. We exploit math and English test cutoffs for promotion to 9th grade among students in Louisiana using administrative data on all K-12 students in the state combined with administrative data on all criminal convictions in the state. Our preferred models use the promotion discontinuity as an instrument for grade retention, and we find that being retained in 8th grade has large long-run effects on the likelihood of being convicted of a crime by age 25 and on the number of criminal convictions by age 25. Effects are largest for violent crimes: the likelihood of being convicted increases by 55.9% relative to the mean due to retention, and the number of convictions increases by 46.7%. We also find that the number of drug crime convictions increases by 36.6% when students are retained in 8th grade. Our data allow an examination of mechanisms, and we show that the effects are likely driven by an increase in high school dropout, lower educational investments, and worse behavioral outcomes. However, we find little effect on juvenile crime, which suggests the effects on adult criminal engagement are driven by worse job market prospects and non-cognitive skills that stem from lower educational investments by students. Using the method proposed by Angrist and Rokkanen (2015), we also estimate effects of grade retention away from the promotion cutoff and show that our results are generalizable to a larger group of low-performing students. Taken together, our estimates indicate that test-based promotion cutoffs lead to large private and social costs in terms of higher levels of long-run criminal convictions that are important to consider in the development and use of these policies.