School performance and the youth labor market

We estimate how 1970-90 changes in an outcome-based measure of school quality (state average test scores) affected changes in earnings for those leaving high school to enter a state's labor force. We find that a one standard deviation deterioration in a state's relative test score performance is associated with a 3% (or .5 SD) reduction in average wages of young entrants to the labor force. We also find a similar decline in college matriculation. There is weak evidence that the school quality effect on earnings diminishes as labor force entrants acquire experience.