This paper (co-written with Jan C. van Ours)  examines how reducing early school-leaving can enable very disadvantaged youth to build a better life for themselves and break cycles of multi-dimensional disadvantage. Our analysis is based on data from the Australian Journeys’ Home, a survey among disadvantaged Australians who often leave school early and display high rates of homelessness, incarceration, substance use and mental health issues.

Using a difference-in-difference framework accounting for heterogenous treatment effects across cohorts and time, we compare the trajectories of respondents who left school at 18 years old or more versus those who left at 14, 15, 16 or 17 respectively. Results indicate that leaving school before age 18 increases males’ likelihood of becoming homeless, incarcerated, using cannabis daily and illegal street drugs weekly. In contrast, females are mostly unaffected by the age at which they leave school except for increases in the probability of homelessness and incarceration in the few years after leaving school or if they leave before 16.

In support of a causal interpretation of our findings, we also show no impact of early school-leaving on outcomes that are related to the treatment but unlikely to be affected by it (parental separation). Our results are also robust to a range of specification checks.

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