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Does early grading affect educational choices? To answer the question, I exploit the staggeredimplementation of a reform which postponed grade assignment in Swedish compulsoryschool. I identify short- and long-term effects of early grading, for students with differentacademic ability and socioeconomic status (SES). When graded early on, high-ability students(especially if high-SES) perform better, and are more likely to choose academic coursesduring compulsory school. Low-ability students react in the opposite way, in particular iflow-SES. While high school attainment increases for high-ability low-SES students, collegeattainment decreases for low-ability low-SES students. None of these effects carry over tothe labor market. This suggests that early grades improve the match between early educationchoices and academic ability, reduce over-investment in education, but exacerbateeducational inequality. I find no evidence of demotivating effects for low-ability students,a plausible mechanism through which grades could affect education choices, and the mainmotivation behind the grading reform. Theoretically, I show that short-term effects are inline with the predictions of a model where students learn about their ability from SES andgrades.


Grades, Ability, Uncertainty, Learning, Sequential Choice, School Choice, Social Background, Educational Attainment, Dropout, Difference in Differences


Educational Assessment, Evaluation, and Research | Education Economics

Research Areas

Applied Microeconomics

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Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

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