Why does starting school older harm schooling? : the role of youth employment laws

Using Israeli data, we establish that the interaction between school entrance age (SEA) policy and youth employment laws increases high school dropout rates among students who start school older - particularly males. This is because these students become eligible for employment at an earlier grade, increasing their likelihood and duration of work, which amplifies dropout rates. Intriguingly, this effect is primarily driven by students who achieved above-average test scores in elementary school. Among males, a higher SEA also reduces participation in and scores on a college entry exam, as well as college enrollment. Unlike most previous estimates, our estimates of the effect of SEA on college entry-exam scores are free from age-at-test effects. In the longer run, a higher SEA reduces educational attainment for both males and females and has a sizable negative, though statistically nonsignificant, effect on their earnings. Our findings suggest that replacing the minimum working age in youth employment laws with a minimum-grade-completion requirement could mitigate the unintended consequence of higher dropout rates among older school entrants.