Central school exit exams and labor-market outcomes

•Analyzes labor-market effects of centralized school exit exams.•Exploits variation in exit-exam systems across German states.•Finds central exams associated with better labor-market outcomes.•Central exams associated with higher earnings for students from lowest school type.•Central exams associated with lower unemployment.

Many countries use centralized exit exams as a governance devise of the school system. While abundant evidence suggests positive effects of central exams on achievement tests, previous research on university-bound students shows no effects on subsequent earnings. We suggest that labor-market effects may be more imminent for students leaving school directly for the labor market and, on rigid labor markets, for unemployment. Exploiting variation in exit-exam systems across German states, we find that central exams are indeed associated with higher earnings for students from the school type directly bound for the labor market, as well as with lower unemployment.