Extracurricular Activities and Wage Differentials

This dissertation develops and estimates a structural dynamic model in which individuals decide among participation in extracurricular activities, study time, and employment during high school. The specification allows for returns to participation in extracurricular activities on salaries and unobserved heterogeneity in students' preferences over study time, extracurricular activities, employment during high school and the acquisition of a bachelor's degree. The model is estimated using a selected sample of 1,875 white males from NELS88. The objective is to evaluate quantitatively the consequences of public policies that eliminate the opportunity for students to participate in extracurricular activities and policies that give payments to students if they obtain higher test scores. Results of counterfactual experiments show that policies that eliminate extracurricular activities in high schools decrease students' tests scores, college graduation rates, and future wages, while policies that give payments based on test scores increase scores and the percentage of students who obtain bachelor's degrees.