Association for Public Policy Analysis & Management

High school dropouts experience higher rates of unemployment, criminal activity, and public assistance dependence, while exhibiting lower earnings and poorer health outcomes compared to graduates. Each dropout imposes a social cost that exceeds $250,000. To help identify and prevent likely dropouts, high schools employ guidance counselors. Using difference-in-differences methods and a large-scale policy change, this paper is the first to estimate the effect of high school counselors on dropout rates. California’s 2008 Middle and High School Counseling Program, a $200 million grant, caused a one-time 20 percent increase in the number of high school counselors.  Following this increase, school counseling levels declined and returned to their initial levels. I exploit within school counselor variation using data on all public high schools between 2009 and 2015. I find that hiring an additional high school counselor decreases the 10^th, 11^th, and 12^th grade dropout rates by six, five, and two percent, respectively. To help interpret the results, I construct a dataset of counselor-to-student assignment rules for 700 schools.  I show that the decreases in dropout rates occur simultaneously because counselors are assigned to students across grades. These estimates imply that if California hires enough counselors to meet the American School Counselor Association’s recommendations, then the net social benefit would exceed $450 million per year.