Lorenzo Cappellari

Using data on a cohort of school leavers observed three years after finishing school this paper estimates the impact of school tracks on post-school behaviours, namely the rates of transition to college, college dropout, labour market participation and unemployment. Identification is achieved using retrospective information on parental unemployment at the time of track choice. Results show that students from the academic oriented track achieve better college performance and experience a worse transition to the labour market relative to students from labour market oriented tracks, consistent with the idea that tracking generates efficiency gains through specialization of knowledge. Results also show that family background is far more important than ability in determining allocation to tracks. The estimated distribution of unobserved heterogeneity suggests that such a situation may result in some inefficient allocations of less able students to college-oriented tracks, inflating college dropout rates. Keywords: School tracking; College performance; School-to-work transition; Endogeneity. JEL Classification: I21, J24, C35l.