The high school exit exam (HSEE) is rapidly becoming a standardized assessment procedure for educational accountability in the United States. I use a unique, state-specific dataset to identify the effects of failing the HSEE on the likelihood of dropping out of high school based on a regression discontinuity design. The analysis shows that students who barely failed the exam were more likely to exit than those who barely passed, despite being offered retest opportunities. The discontinuity amounts to a large proportion of the dropout probability of barely failers, particularly for limited-English-proficiency, racial-minority, and low-income students, suggesting that the potential benefit of raising educational standards might come at the cost of increasing inequality in the educational system. © 2009 Elsevier Ltd. All rights reserved.
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