Early Grade Retention Harms Adult Earnings

This paper provides new causal evidence on the effects of grade retention on educational attainment, behavioral outcomes, and labor market performance by analyzing Texas's reading test–based retention policy. Using a fuzzy regression discontinuity design, I find that third-grade retention significantly reduces annual earnings at age 26 by $3,477 (19 percent). While temporarily improving test scores, retention increases absenteeism, violent behavior, and juvenile crime, and reduces the likelihood of high school graduation. Moreover, retained students exhibit higher community college enrollment but lower public university attendance, though neither estimate is statistically significant. (JEL D91, H75, I21, I26, I28, J31)

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Publication Details

Journal
American Economic Journal Applied Economics
Published
2026-09-28
DOI
https://doi.org/10.1257/app.20230121
Primary Topic
School Choice and Performance
Type
article
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article

Early Grade Retention Harms Adult Earnings

Jiee Zhong
American Economic Journal Applied Economics
School Choice and Performance
article

Early Grade Retention Harms Adult Earnings

Jiee Zhong
article en

Abstract

This paper provides new causal evidence on the effects of grade retention on educational attainment, behavioral outcomes, and labor market performance by analyzing Texas's reading test–based retention policy. Using a fuzzy regression discontinuity design, I find that third-grade retention significantly reduces annual earnings at age 26 by $3,477 (19 percent). While temporarily improving test scores, retention increases absenteeism, violent behavior, and juvenile crime, and reduces the likelihood of high school graduation. Moreover, retained students exhibit higher community college enrollment but lower public university attendance, though neither estimate is statistically significant. (JEL D91, H75, I21, I26, I28, J31)

American Economic Journal Applied EconomicsVol. 18(4)
Miami University (US)
Openalex Percentile: Top 3%
School Choice and Performance
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