Why does starting school older harm schooling: First evidence on the role of youth employment laws

Using Israeli data, our study reveals that the interaction between school entrance age (SEA) policy and youth employment laws results in increased high school dropout rates among older school entrants, particularly males. This phenomenon arises as these older entrants become legally eligible for employment at a lower grade, potentially influencing their decision to leave school prematurely. Our findings show that a higher SEA not only elevates the likelihood of dropout but also diminishes the probability of participating in college entrance exams, scoring well, and entering college. Remarkably, our estimated effects on college entry exam scores are not driven by age-at-test effects. A particularly intriguing finding is that delaying school entry increases the likelihood that the exact same student will initially achieve above-average elementary test scores but ultimately drop out of high school. This suggests that a higher SEA not only elevates dropout rates among traditionally underperforming children but also among students who initially performed well in elementary schooling. We also observe that a higher SEA reduces educational attainment for both genders but does not impact employment or earnings in adulthood. Our findings suggest that replacing the minimum age criterion for working with a minimum grade completion requirement in youth employment laws could address the unintended consequence of increased dropout rates among older school entrants.