Cascio, Elizabeth U., and Ethan G. Lewis. 2006. “Schooling and the Armed Forces Qualifying Test: Evidence from School-Entry Laws.” Journal of Human Resources 41(2): 294–318.
How much can late schooling investments close racial and ethnic skill gaps? We investigate this question by exploiting the large differences in completed schooling that arise among teenagers with birthdays near school-entry cutoff dates. We estimate that an additional year of high school raises the Armed Forces Qualifying Test (AFQT) scores of minorities in the NLSY 79 by 0.31 to 0.32 standard deviations. These estimates imply that closing existing racial and ethnic gaps in schooling could close skill gaps by between 25 and 50 percent. Our approach also uncovers a significant direct effect of season of birth on test scores, suggesting that previous estimates using season of birth as an instrument for schooling are biased.
Elizabeth U. Cascio is an assistant professor in the Department of Economics at the University of California Davis, faculty research fellow at the National Bureau of Economic Research, and research fellow at the Institute for the Study of Labor. Ethan G. Lewis is a research economist at the Federal Reserve Bank of Philadelphia. The authors thank two anonymous referees and seminar participants at the University of California Berkeley, the University of California Santa Cruz, and the 2004 Society of Labor Economists Annual Meeting for their helpful comments. Both authors gratefully acknowledge financial support from the Graduate Division and the Department of Economics at the University of California Berkeley. Cascio also gratefully acknowledges financial support from the Spencer Foundation. The views expressed herein are those of the authors and not necessarily those of these funders, the Federal Reserve Bank of Philadelphia, or the Federal Reserve System. The data used in this article can be obtained beginning October 2006 through September 2009 from Elizabeth U. Cascio, Department of Economics, UC Davis, eucascio@ucdavis.edu.