If the age at which students can dropout of high school is increased from 16 to 18, what happens to production possibilities and unemployment rates?

Increasing the age for allowing students to drop out from
school from 16 to 18, will definitely mean that people can start seeking regular full
employment at the age of 16 rather than at 18. This is assuming that thee are no other
legal constraints on employment of people under 18 as a part of child labour or any
other law. Thus number of people seeking employments with this will definitely tend to
increase by this change.

The impact of this increased
availability of people depend on the extent to which production of goods and services in
the economy was constrained by shortage of this kind of manpower. If an economy is
already facing a situationof high employment rate, it is quite likely that the
production is being constrained by factors of production other than manpower. In such
there may not be any significant extension in production possibility
frontier.

The impact of rate of unemployment will also,
similarly, depend on the impact of increased availability of manpower in increasing
production. An economy constrained by manpower shortage may be able to increase its
total production with the availability of added manpower. Under favourable conditions,
this may create a multiplier effect which could actually reduce the unemployment rate.
But in adverse conditions, the economy may not be able to provide jobs to the increased
number of job seekers, and the unemployment rates may increase.