Enforcing Compulsory Schooling by Linking Welfare Payments to School Attendance: Lessons from Australia’s Northern Territory*

Efforts to enforce compulsory schooling by linking welfare assistance to school attendance are rarely successful in themselves. One reason is a lack of credibility: targeted families may anticipate that welfare administrators will be reluctant to withdraw support when attendance does not improve. Australia's School Enrolment and Attendance through Welfare Reform Measure (SEAM) demonstrates the impact of a credible threat. Targeting the Indigenous population of the Northern Territory, its credibility stemmed from the extreme circumstances created by the Northern Territory Emergency Response Act and from the troubled history of race relations in Australia. We show, using a difference-in-difference analysis of standardized test data (NAPLAN), that SEAM had a substantial, immediate impact: in its first year it triggered an increase in test participation rates of 16- 20 percentage points over pre-SEAM levels; and it significantly increased the share of tested cohorts achieving national minimum standards by 5-10 percentage points. However, welfare payments were rarely withheld from truant families and participation rates fell in subsequent years, though remaining significantly above pre-SEAM levels. This suggests that initiatives such as SEAM will not be fully effective in the longer term unless accompanied by measures that increase parents’ and children’s appreciation of the value of schooling.