Reducing university dropout rates with entrance tests – self-fulfilling prophecy or high quality students

In periods of student booms in tertiary education, the selection of students entering universities gains importance. Consequently, assessing the suitability of different selection methods is crucial for a fair selection process. This paper analyzes whether study success before and after the introduction of an aptitude test is a reasonable measure for the performance of such a test. Employing data from Swiss medical schools, we exploit the implementation of an aptitude test in 1998. The dropout rate in medical schools decreased significantly after the introduction of the test. However, utilizing the performance of transfer students from medical schools – students leaving medical sciences for another subject area – we demonstrate that this reduction in student dropout was not solely a result of better student quality but also of reduced standards in those medical schools. Applying a difference-in-differences strategy, we provide evidence for the endogeneity of dropout rates in medical sciences.