How to Keep Kids in School

By Marina Bassi and Matias Busso


Each year tens of thousands of young Latin Americans drop out of school to take low-skilled jobs. The low-level of graduation, with less than 50% of 24-year-olds having completed secondary school, is not only a stumbling block for individuals destined to lives of menial labor.  It is a drag on the region’s ability to innovate, generate technologies and enjoy robust and sustained economic growth. What can be done?


Unquestionably, much already has been done. On average, every age group in Latin America since the early 20th century has enjoyed a higher graduation rate in primary and secondary education than previous generations. Moreover, the graduation rate increase is impressive, soaring, in the case of secondary school, from 12% for people born in 1930 to 49% for those born in 1980, with a greater number of students graduating on time.

Governments deserve part of the credit for the uptick. They have considerably boosted outlays for primary and secondary education. Argentina and Brazil, with 37% and 66% increases in educational spending above GDP per capita from 1990-2010, have even reached relative spending levels comparable to those of the highest performers in international student assessments, according to an IDB study of 18 Latin American countries during the period.

Other policy decisions have helped. Cash transfer programs, which provide government money to families that keep their children in school, have expanded educational opportunities, especially for the poor. Some countries, like Argentina and Colombia, have decentralized their school systems, so they can be more adjusted to local needs. And many countries have made secondary school– – mandatory, as in the case of Chile.

Still, from a certain vantage point, the educational outlook in Latin America represents a glass half empty. Secondary-school graduation rates in Latin America, continue to lag behind those of most developed countries and are a handicap for the countries of the region as they attempt to compete with advanced economies.

A large part of the problem occurs at the critical juncture when students finish primary school and begin secondary school. It is during those years, when most students are around 14, that the opportunity cost for students of staying in school rises. If students can quit school to help support their families by working on plantations, in retail, or in construction, countervailing incentives must exist to convince them to continue studying, especially when there is strong local demand for low-skilled labor.

One solution is to improve education and educational policy at the primary level to reduce the number of students that stay back and repeat grades and are overaged by the time they reach secondary school. If that were to happen, students on average would have more years of schooling under their belt before they reached the critical age of 14.

Improving education at the secondary level also is critical. Latin American nations have bolstered coverage so that today nearly three-quarters of the secondary-age group attends classes (up from around two-thirds during the 1990s). But in emphasizing coverage, they have shortchanged quality. In 2012, eight Latin American nations participated in PISA — the international exam that measures core competencies in mathematics, language and science knowledge. Their scores were well below the OECD average and in the bottom third of all 65 participating nations. A stunning 50% of Latin American students, for example, failed to reach the minimum level in reading.

That means that Latin American students are running aground when it comes to the cognitive skills required by the labor market. They also are flailing in sector-specific technical skills, and perhaps, most importantly, in socioemotional skills, such as the ability to work in a team, take orders, and provide respectful service to clients. Indeed, in a 2010 IDB survey in Argentina, Brazil and Chile, more than 85% of firms said they had difficulty finding the skills they needed among high school graduates.

This creates a vicious circle. Companies are reluctant to hire unprepared secondary school graduates; secondary school students, seeing their ultimate prospects for employment as dim, doubt that studying to graduation is worth it.

In a recent experiment in Chile, researchers found that informing children about financial aid for tertiary education increased the likelihood they would enroll in secondary education. In an experiment in the Dominican Republic, students completed more years of schooling when told that doing so would earn them higher salaries.

Students, in other words, are more likely to stay in school if they think it is worth it for them economically. They react to perceived returns. But those returns would be hugely improved if secondary school education was strengthened in Latin America with better teachers, smaller classes, more sophisticated technology and instructional materials, and a greater emphasis on so-called “soft” or socioemotional skills that make young people attractive to employers in the 21st-century labor market.


See: Bassi, Busso and Muñoz, 2014 and Bassi, Busso, Urzúa, and Vargas, 2012 for further references.

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The Author

Matías Busso

Matías Busso

Matias Busso is a Senior Economist in the Research Department at the Inter-American Development Bank. He is also a Research Fellow at the Center for Distributive, Labor and Social Studies (CEDLAS) and a member of the executing committee of the Network of Inequality and Poverty of LACEA. His research uses empirical evidence and theory to inform the design of more effective public policies in areas related to labor, education, and productivity. Matias received his Ph.D. in Economics from the University of Michigan in 2008. He has published articles in the American Economic Review and The Review of Economics and Statistics, among others.

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