The high-school dropout decision and its wage consequences

The purpose of this study is to investigate the wage consequences of leaving high school prior to graduation. The dropout process is modeled as interdependent events involving the dropout decision itself and expected wage offers. Since selectivity biases may occur in such models, our empirical analysis permits adjustment for any such biases. Our empirical results provide support for the existence of a self-selection bias in the initial work experiences following high school. We also find that wages for dropouts progressively decline in subsequent years relative to high-school graduates.