Enforcing Compulsory Schooling by Linking Welfare Payments to School Attendance: Lessons from Australia’s Northern Territory

Australia's School Enrolment and Attendance through Welfare Reform Measure (SEAM), enacted against the backdrop of the Northern Territory Emergency Response, threatened to withhold welfare payments from Indigenous families with truant children. We show, using a difference-in-difference analysis, that this threat had a substantial, immediate impact on participation rates in standardized tests. However, as administrators rarely withheld welfare payments from truant families the credibility of the threat was undermined and most of the initial improvement in participation dissipated. This demonstrates the limitations of using financial measures to enforce compulsory schooling among severely disadvantaged populations, even in extreme circumstances.