Assessing the value of additional years of schooling for the non academically inclined

This paper seeks to assess the benefits of additional years of schooling for those Australian youth who are not well suited to further education. This has a very important policy context as school retention rates have increased markedly over recent decades and many traditional VET pathways have disappeared. Raising the compulsory schooling age is regularly put forward as a policy response to high youth unemployment rates. However, there is a lack of empirical evidence available to show how this may impact on those affected. If, for some segments of a cohort, schooling does largely serve as a signalling mechanism, then increasing the compulsory schooling age may only serve to devalue the information content and reduce the efficiency of the youth labour market. In this report data from the 1995 Year 9 Cohort of the Longitudinal Surveys of Australian Youth (LSAY) is used along with a variety of empirical approaches to assess the benefits of additional years of schooling for various groups of youth conditional upon their estimated propensity to engage in further schooling.[p.1-2