Drop-out decisions in a cohort of Italian university students

We study the determinants of student drop-out decisions using data on a cohort of over 230000 students enrolled in the Italian university system. We find that students who leave their homes to enrol at university (off-site students) drop out significantly less than those who study in their home town. We provide significant evidence that off-site students are a self-selected sample of the total population. Accordingly, we use an instrumental variable (IV) approach to identify the causal relationship. The IV estimation finds that studying off-site negatively affects drop-out decisions and more so for students growing up in the south of Italy who typically study off-site in the centre-north of Italy.