Do Second Chances Pay Off? Evidence from a Natural Experiment with Low-Achieving Students

In several countries, students who fail end-of-high-school high-stakes exams are faced with the choice of retaking or forgoing postsecondary education. We explore exogenous variation generated by a policy that imposed a performance threshold for admission into postsecondary education in Greece to estimate the effect of retaking exams on academic performance and various measures of the quality of received offers. Using a fuzzy regression discontinuity design and novel administrative data, we find that low-achieving students who retake national exams improve their performance by around 0.6 of a standard deviation, and obtain higher quality postsecondary offers