(joint with Jan Marcus, DIW Berlin)
In designing education systems, policy-makers face a trade-off between the provision of higher levels of schooling and earlier labour market entries. The G8-reform, a fundamental education reform in Germany, tackles this trade-off by increasing education efficiency: The time in high school is reduced by one year while the total number of instruction hours is left unchanged. As a first indicator of the overall effectiveness of this recent policy, we study its effect on grade repetitions and high school graduation rates. Employing administrative data on all pupils in Germany, we exploit both temporal and regional variations in the implementation of the reform. We show that the shortening of the high school track length has no impact on grade repetitions in lower grades, whereas they double for pupils in the final years before graduation. The large majority of students, however, completes high school earlier. We cannot find any reduction in graduation rates. The results are robust to various changes in model specifications. The results indicate that the reform's potential benefits for labour markets, pension schemes and fertility will be slightly attenuated due to increased repetition rates.