Liquidity Constraints and University Participation in Times of Recession. Evidence from a Small-scale Programme

In this paper we investigate the relationship between liquidity constraints and university participation. We assess an educational programme introduced in the Province of Trento (North-East of Italy) in 2009 in order to enhance university participation and to reduce social inequalities in access to higher education. The programme, known as Grant 5B, consists in generous financial aids targeted to students from low-income families with outstanding secondary school achievement. We exploit a unique dataset resulting from the linkage of administrative data with an ad hoc survey carried out on a sample of upper secondary graduates from 2009 to 2012. We use a regression discontinuity design to estimate the impact of the intervention on the transition from secondary to tertiary education and on other choices connected to university attendance in each year considered and on strata of the population of interest. We find that the programme has no significant effect on enrolment rates, but it exerts a positive and remarkable effect on redirecting students already bound for university to enrol away from their place of residence. However, that effect changes over time and, as the economic recession persists, it disappears. Our findings suggest that students who attended successfully a secondary academic track have higher probability to benefit from the Grant 5B. Moreover, given the fact there is no effect on the enrolment probability, we specify a set of regression models to account for the interplay between income and merit, in order to simulate what would happen if a change in the eligibility rules will take place. Evidence shows that a relaxation of the eligibility rules based on secondary school achievement might be more effective in fostering access to university.

Authors

  • Loris Vergolini
  • Nadir Zanini
  • Nicola Bazoli

Details

Publication number: Working Paper 2014-11
Date: 12/2014
  • Financial aid,
  • University enrolment,
  • Regression discontinuity,
  • Programme evaluation