Recently released summary results from the application of the TERCE (Third Regional Comparative and Explanatory Study) exam in 2013 across Latin America show that Central American students underperform the Latin America average, with the clear exception of Costa Rica (UNESCO 2015). A first snapshot of summary results is presented in Figure 19, for all the Central America countries participating (all except El Salvador). At both 3<sup>rd</sup> and 6<sup>th</sup> grades, students in Nicaragua, Honduras, Guatemala, and Panama underperform the Latin America average, and 30-40 percent are projected to fall into the lowest two performance levels (of five) in each country (compared to 26 percent across Latin America). Costa Rica stands out as a strong performer, with only 11 percent of students projected to fall into the lowest two levels (UNESCO 2015). Compared to SERCE (Second Regional Comparative and Explanatory Study) results from 2006, learning outcomes have improved in Guatemala, Panama, and to a lesser extent in Nicaragua. Performance in Costa Rica has declined (Figure 20).

In a global context, education quality and learning outcomes in Central America are also low. In Honduras, 6<sup>th</sup> grade students taking the 4<sup>th</sup> grade TIMSS 2011 (Trends in International Mathematics and Science Study) mathematics assessment scored well below the international average. In the 2012 PISA (Program for International Student Assessment), Costa Rica’s 15 yearold students performed near the bottom of the international distribution. In math, Costa Rica ranked 55 of 64 countries, and 51 of 64 in sciences. These results suggest that, while the quality of primary education in Costa Rica (as measured in SERCE and TERCE) is relatively strong, secondary education is weaker. They may also suggest that other Central American countries would have even weaker outcomes at the secondary level on the global scale, given Costa Rica’s outperformance in the regional exams.

These weak results corroborate negative perceptions held by citizens of the quality of public education and the value of education in improving labor market outcomes across Central America, as measured in the 2011 Latinobarometro surveys (World Bank 2014b and 2014c). For example, in Honduras, citizens give their public education system one of the lowest rankings in Latin America. At the same time, there is also substantial variation in quality within countries; as is the case with access, outcomes for youth at the top of the socioeconomic distribution are much better than for those at the bottom. For example, in Costa Rica, a 1 standard deviation increase in a socioeconomic index correlates to a 0.3 standard deviation increase in SERCE scores (World Bank 2014d). Low average educational quality in many cases masks large disparities, whereby strong results at the top of the socioeconomic distribution co-exist with very weak ones.

# **3.4 How dropout decisions are actually made, and evidence from qualitative research**

Taken together, human capital theory, the limited causal evidence available, and the empirical correlations presented above show that a host of factors affect the marginal costs and benefits of staying in school, and ultimately the decision to persist or drop out. From a public policy perspective, this could be viewed as promising, in that there are many “levers to pull” or opportunities for policy to impact on the dropout decision. At the same time, neither theory nor empirics provide clear guidance on which factors may be the most important and therefore should be the priorities for policy interventions.

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