Gender differences in the lifecycle benefits of compulsory schooling policies

Abstract

We estimate the lifecycle benefits of policies that raise the minimum school leaving age (MSLA). Using a difference-in-differences method, we estimate the causal impact of two adjacent Australian state reforms that extended the MSLA from 14 to 15 in mid 1960. Important gender and state differences emerge in how the reforms affected secondary and postsecondary education outcomes. The biggest winners were women in Victoria, for whom the reform increased postsecondary education, while the reform lifted only minimum schooling qualifications in South Australia. As a consequence, the Victorian reform improved the lifecycle capital accumulation process especially for women, while few benefits were observed for South Australians. Victorian women entered higher-skilled occupations, were more likely to own homes, to be still married and satisfied with family life in pre-retirement age. Victorian men also gained, but the gains were limited to better cognitive and non-cognitive skills, health, and satisfaction with (family) life. Yet, all groups benefitted from delayed and reduced fertility, and a happier family life. We conclude that raising education levels for individuals at the lower end of the education spectrum produces lifecycle benefits that exceed market-return considerations, but major benefits occur only if the reform impacts education outcomes beyond minimum schooling.