This paper estimates the demand for post-compulsory education by 16-year-old boys and girls who have reached minimum school-leaving age at the start of the school year. The data set consists of annual observations for 1955-1978, and the dependent variable is the proportion of male or female home students who stay on as full-time students in English and Welsh schools and colleges of further education. There are at least two reasons for the interest in the demand by 16-year-old boys and girls. First, despite continuous growth in the proportion of the age group staying on at school, the number of 16-year-old school-leavers is still the largest group of young workers entering the labour market. Even in 1978-1979, when the proportion of girls staying on at school was the highest ever recorded and the proportion of boys was only 1 percentage point below the highest, only 39 per cent of boys and 47 per cent of girls were staying on at school after reaching minimum school-leaving age. Second, variations in the 16-year-old staying-on rate are likely to be reflected in variations in the 17-year-old staying-on rate one year later, and in the rate of 18-year-olds taking A-levels and applying for university places two years later. As is well known, higher education in England and Wales underwent its most serious depression since the war in the 1970s, largely because the demand for places by home students was well below that expected in the 1960s, when long-term plans for the expansion of higher education were drawn up.' A companion paper (Pissarides, 1981) examines the reasons for the depression in higher education, and demonstrates the close links between the school staying-on rate and the demand for higher education two years later. Section I describes the staying-on rate for 16-year-old boys and girls, and states the stylized facts in need of explanation. Section II examines briefly the theory underlying education choices and introduces the methodology and variables used in the empirical analysis. Section III offers an extensive discussion of the empirical findings, and Section IV uses these findings to investigate the main reasons behind the stylized facts described in Section I.
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