The study provides the first direct evidence that young dropouts in today's economy are not relegated to jobs where basic cognitive skills go unrewarded, said John H. Tyler, assistant professor of education and economics, whose paper is in press in the Economics of Education Review. Further, it emphasizes the importance of skill acquisition for high school students who may eventually drop out.
"The skills that young, low-skilled individuals take into their first jobs do matter," said Tyler. "As a result, the joint investment that schools and students make in developing basic skills matters - even for students who will dropout before gaining a diploma."
The study looked at a group of more than 12,600 Florida high school dropouts who were between the ages of 16 and 18 when they took the General Educational Development (GED) exams in the late 1990s. Most had completed 10 to 11 years of schooling before they dropped out. Tyler based the study on the scores from math tests because in order to do well on the GED math test the test-taker must also be able to read at a basic level and follow directions.
Charting the dropouts' earnings over their first three years in the labor market, Tyler found high school dropouts who had scored higher on the GED math test had better earnings in the kind of low-level jobs that facilitate a dropout's entry into the labor market - even after controlling for related factors.
Earnings of low-skilled, low-educated individuals have declined overall during the last two decades. Many analysts believe the decline in those absolute earnings is best explained by a growing use of technology that increases demand for highly skilled workers, while decreasing the demand for lower skilled workers such as young dropouts.
Tyler's findings reinforce the idea that dropping out of school is a bad economic decision. The very low quarterly earnings of GED candidates and very low earnings profiles of dropouts in the study are reminders that dropouts are at a severe economic disadvantage.
Educational systems can increase the skills of dropouts by keeping them in school longer or by intervening in the post-dropout years and, in doing so, improve the dropouts earnings after school, according to Tyler. While a high school diploma is an important certification, Tyler's work shows that education itself - literacy and math skills - has a direct bearing on earning potential whether or not an individual completes secondary school and received the diploma.
Tyler researches the economics of education and he has argued in favor of scientifically based education research at a forum of the nation's policy-makers.