When children work, their education competes for their time and effort. This paper develops and estimates a structural model in which Grade 6 students in Mexico choose among school–work alternatives, with study effort determined endogenously. Choices depend on local school options, travel distance, and labor market wages. Achievement is modeled using a value-added specification with effort as an input. The model is estimated using test scores, survey data from students, parents, and principals, school locations, and census-based wage data. Counterfactual simulations show that enforcing child labor bans would reduce dropout between Grades 6 and 7 by only 6.6 percent, with modest gains in effort and test scores. Policies that reduce travel costs or improve perceptions of rural telesecundarias achieve larger enrollment gains at potentially lower cost. The results highlight the importance of incorporating both schooling and labor choices when evaluating education policies in contexts where child labor is prevalent. 

Millions of students around the world are retained and repeat a grade each year, yet we may not fully understand the consequences of this choice. Especially in low-income countries, where the majority of repeaters reside, and the decision is often at the teacher's discretion, it is important to understand how parents, students, and schools react to this negative information shock. In this paper, we use rich matched household-child-school panel data from Pakistan to study the dynamics of the beliefs, investments, and outcomes of these three agents following a student not being promoted to the next grade. We find that following grade repetition, parents revise downward their expectations, beliefs, and investments. Students are discouraged by the retention, and decrease their beliefs in the value of study effort. Conversely, schools do not play a large role, and teachers have no negative bias towards students who are repeating. Overall, we find negative effects of repetition: repeaters score -0.27 to -0.44 standard deviations worse in math, English, and Urdu and are 7.1 percentage points more likely to drop out than their peers.

In many countries, conditional cash transfers offered by the government have been shown to increase school enrollment for the beneficiaries. However, these policies’ potential to increase overall human capital depends on the schools’ capacity to expand enrollment with sufficiently high-quality instruction, ensuring that larger classes do not negatively affect peers. We develop a structural model in which students first face an enrolment decision, and then an effort decision which will impact their achievement and the effort of their teacher. Class composition and effort choices are determined endogenously via a strategic game, which takes into consideration peer effects within the classroom. To estimate the model, we combine administrative data on test performance and cash transfers, socioeconomic surveys, and spatial data on child wages. Our model allows for heterogeneous endowments and teacher ability, and with it we can evaluate the impact of a conditional cash transfer on not only beneficiary enrollment choices and achievement, but also on their classmates.