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Education is widely recognized as the primary driver of human capital accumulation. However,
policies designed to promote educational attainment often overlook students’ endogenous
responses. This paper provides empirical evidence of the causal impact of relaxed academic
standards on student effort and achievement. We find that academic leniency results in mechanical
GPA increases, but significant reductions in effort among lower ability students based
on lower attendance and lower numerical grades. These heterogeneous effects compound and
exacerbate gaps in engagement and achievement throughout high school, ultimately worsening
deficits in human capital accumulation as measured by ACT scores.
