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,We thank Timothy Donohue and Emiko Usui for excellent research assistance. We also re-ceived helpful comments from Glen Cain, Thomas DeLeire, Lars Hansen, James Heckman, Robert LaLonde, Jean-Marc Robin, George Jakubson and especially Tim Conley and Derek Neal as well as participants in seminars at the American Economic Association Winter meetings (January 2000), Boston College, Cornell University, CREST-INSEE, Duke University, IZA, Johns Hopkins University, Harvard University, MIT, Northwestern University, Princeton University, University of Chicago, University College London, University of Florida, University of Maryland, University of Missouri, University of Rochester, and University of Wisconsin at Madison. We are grateful for support from the National Science Foundation grant 9512009 (Altonji), the National Institute of Child Health and Development grant R01 HD36480-03 (Altonji and Taber), and the Institute for Policy Research, Northwestern University.,Department of Economics and Institute for Policy Research, Northwestern University and NBER,Department of Economics and Institute for Policy Research, Northwestern University

Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools