The Effect of Compulsory Schooling on Skills: Evidence from a Reform in Germany

Based on high-quality skill data from PIAAC, this paper provides evidence on the effect of schooling on labor-market relevant cognitive skills. For identification, I exploit the staggered introduction of a compulsory ninth grade in basic track schools across German states, as well as a simultaneous reform that introduced short school years to harmonize the start of the school year nation-wide. Instrumental-variable results suggest that the additional year of compulsory schooling increased numeracy skills of basic-track students by about 0.2 standard deviations. Using superior skill data, the results contrast with previous evidence of zero skill effects of compulsory schooling in Germany