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Joshua D Angrist, Victor Lavy

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In Israel, as in many other countries, a high school matriculation certificate is required by universities and some jobs. In spite of the certificate's value, Israeli society is marked by vast differences in matriculation rates by region and socioeconomic status. We attempted to increase the likelihood of matriculation among low-achieving students by offering substantial cash incentives in two demonstration programs. As a theoretical matter, cash incentives may be helpful if low-achieving students reduce investment in schooling because of high discount rates, part-time work, or face peer pressure not to study. A small pilot program selected individual students within schools for treatment, with treatment status determined by previous test scores and a partially randomized cutoff for low socioeconomic status. In a larger follow-up program, entire schools were randomly selected for treatment and the program operated with the cooperation of principals and teachers. The results suggest the Achievement Awards program that randomized treatment at the school level raised matriculation rates, while the student-based program did not.