High school graduation rates have increased dramatically in the past two decades. Some skepticism has arisen, however, because of the confluence of the graduation rise and the starts of high-stakes accountability for graduation rates with No Child Left Behind (NCLB). In this study we provide some of the first evidence about the role of accountability versus strategic behavior, especially the degree to which the recent graduation rate rise represents increased human capital. First, using national DD analysis of within-state, cross-district variation in proximity to state graduation rate thresholds, we confirm that NCLB accountability increased graduation rates. However, we find limited evidence that this is due to strategic behavior. To test for lowering of graduation standards, we examined graduation rates in states with and without graduation exams and trends in GEDs; neither analysis suggests that the graduation rate rise is due to strategic behavior. We also examined the effects of “credit recovery” courses using Louisiana micro data; while our results suggest an increase in credit recovery, consistent with some lowering of standards, the size of the effect is not nearly enough to explain the rise in graduation rates. Finally, we examine other forms of strategic behavior by schools, though these can only explain inflation of school/district-level graduation rates, not rational rates. Overall, the evidence suggests that the rise in the national graduation rates reflects some strategic behavior, but also a substantial increase in the nation’s stock of human capital. Graduation accountability was a key contributor.
School accountability, high school graduation, human capital formation
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