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How Does Aid Matter? The Effect of Financial Aid on University Enrolment Decisions

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Document language: 
English
Publication number: 
2011-04
Publication type: 
Progress Report
Author(s): 
Loris Vergolini,
Nadir Zanini
Abstract: 

Using a counterfactual approach, this paper empirically investigates the impact of an educational programme recently introduced in the Province of Trento (North-East of Italy). The aim of the policy is to foster university enrolment of students from low-income families and to reduce inequalities in access to higher education. The programme, known as Grant 5B, consists in generous incentives: it targets the university students from low-income families and is awarded upon both merit and demonstrated financial need. We exploit data from an ad hoc survey conducted on a sample of upper secondary graduates and employ a regression discontinuity design to estimate the impact of the intervention on the university enrolment decisions. We find that the programme has no significant effect on enrolment rates, but it exerts a positive effect on redirecting students already bound for university to enrol outside the place of residence. Relying on the relative risk aversion theory, we explain why a relaxation of the eligibility rules based on merit might be more effective in reducing social inequalities in access to university.

Keywords: 
financial aid,
university enrolment,
regression discontinuity,
programme evaluation
JEL classification: 
C31, I23, I24, I28, I38
Date: 
December, 2011