Grading practices and secondary school track choice: Evidence from a German policy reform

Abstract: Many school systems across the world track their students by ability. The German school system tracks earlier than most and each track leads to very different academic degrees and labor market opportunities. This increases the relevance of educational policy at the elementary school level. This thesis exploits a policy reform from the 1970s and 1980s, in which a number of German states postponed the assignment of number grades to begin only with Grade 3. Using a difference-in-differences (DD) approach and data from the German Socio-Economic Panel, I analyse the effects of later grading on pupils' propensity to pursue either of the three secondary school tracks. I consistently fail to reject zero average effects on the degrees obtained. Considering treatment effect heterogeneity between genders, I find that later graded males are around 6 percentage points more likely to obtain either of the higher degrees relative to their earlier graded peers. I find no evidence of a treatment effect on females. Pupils from educated households are around 3.3 percentage points more likely to obtain the lowest degree, while pupils from low-educated households are around 3.6 percentage points less likely to obtain the lowest degree, compared to their earlier graded peers.