What Drives the Relationship Between Early Criminal Involvement and School Dropout?

Objective: We examine the relationship between early criminal involvement and school dropout, and analyze which factors underlie this relationship, making use of administrative data from the Netherlands. Methods: We start by determining the unconditional correlation between early criminal involvement and school dropout, using a basic ordinary least squares model. As this association is likely to be driven by different factors, we proceed by including an extensive set of observable family and individual characteristics into the estimation model. We further proceed to models that account for the influence of unobservable heterogeneity by estimating school, class, sibling and twin fixed effects. Results: Criminal involvement is associated with an 11 percentage point higher probability of school dropout. The magnitude of this relationship decreases gradually when we account for larger shares of observed and unobserved heterogeneity. The coefficient in the same-gender twin fixed effects model indicates a 3 percentage point higher probability of school dropout, which is statistically significant at a 10 % level. We also find that the association between criminal involvement and school dropout is stronger if juveniles are involved in severe criminal activities. Conclusions: We conclude that the observable and unobservable factors for which we account explain around 73 % of the unconditional correlation between criminal involvement and school dropout. The remaining variation likely reflects individual-specific characteristics that are different between same-gender twins. A true treatment effect, if existing, is likely to be relatively small. At the same time, serious criminal behavior appears to causally affect school dropout.