“Not ready” as a productive wake-up call: Do second chances improve human capital investments?

We study a policy reform in Denmark that introduced a GPA threshold for academic readiness for upper secondary education 1.5 years before the end of middle school. Students near the threshold received similar information about their academic performance, but those just below it were labeled “not ready” and offered a second chance through reevaluation the following year. Using a fuzzy regression discontinuity design, we find that students just below the threshold improved their final middle school GPA, were more likely to complete high school, and subsequently more likely to enroll in post-secondary education. These effects are driven primarily by increased student effort, evidenced by higher conscientiousness and reduced part-time work, rather than changes in school or parental investment. Importantly, we find no adverse effects on student well-being. The positive effects are especially pronounced among students from low socioeconomic backgrounds and among girls, but we observe beneficial impacts across all subgroups. Our results suggest that entry criteria combined with second-chance opportunities can substantially improve students’ educational trajectories, particularly in the transition to upper secondary education. • A “not ready” signal with second-chance options spurs student investment. • Improves academic performance and long-term educational attainment. • Effects arise primarily through greater student effort and diligence. • Entry criteria with second chances can motivate without adverse impacts.