The effect of grade retention on secondary school performance: Evidence from a natural experiment

We study the effects of grade retention on secondary school performance using a change in legislation in Colombia. In 2010, the rule that allowed schools to retain a maximum of 5 percent of their students was abolished. We exploit variation in changes in schools' retention rates across time in a difference-in-differences framework, and find that higher school retention rates improved performance on high-school exit tests scores. While gains in learning did not differ between STEM and non-STEM subjects, increased retention disproportionately benefited non-retained students, students from higher socioeconomic backgrounds, private schools, and schools operating under a full day shift.