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School dropout is a growing concern in Central America, and in Latin America as a whole, because of its consequences for economic productivity, the inclusiveness of growth, social cohesion, and increasing youth risks. This paper utilizes more than two decades of household survey data to construct a systematic overview of school dropout at the primary and secondary levels in Central America, focusing on recent trends in dropout patterns and their underlying causes. Within each country, poverty, rurality, and indigenous group membership are the strongest correlates of dropout, reflecting several underlying factors that affect the marginal benefits and costs of staying in school. Global and regional evidence increasingly points to common policy priorities for reducing dropout across Central America, including addressing remaining gaps in access at the pre-primary and secondary levels, improving the quality of education at all levels, and strengthening the coverage, targeting, and coherence of existing programs aimed at improving education outcomes. However, additional rigorous evaluations, including cost data, are needed to identify the most effective specific approaches in each country.

This study examines recent trends and factors in school dropout at the upper secondary education level across Latin America. The methodology employs repeated cross sections of data to track the life cycle path of cohorts of individuals in 18 countries. A key finding is that while upper secondary enrollment rates increased in the region, dropout has remained persistently high, despite relatively favorable macroeconomic conditions. To explain dropout trends, the study examines the impact of three groups of factors: (i) shifts in the cohort size and socioeconomic composition of the population eligible for entering upper secondary; (b) the macroeconomic environment and labor market opportunities; and (c) the returns to schooling. We show that an important factor in persistently high dropout rates has been the higher numbers of students from poor socioeconomic backgrounds reaching upper secondary. In addition, high returns to education have been a pull factor into schooling, while, especially in countries where the majority of youth dropout prior to upper secondary, the data confirm an apparent substitution effect due to the opportunity cost of forgoing employment opportunities. The findings confirm the growing policy focus on upper secondary across Latin America and suggest implications for the policy agenda.