Need based aid from selective universities and the achievement gap between rich and poor
Year: 2016
Type: report
Abstract: During high school, the achievement gap between rich and poor students with the same initial test scores increases. In this paper, I examine the role of need-based aid from selective universities in closing the achievement gap. Because applicants for selective universities put more efforts for higher admission probability, disparity in application behavior between rich and poor students can lead to a larger effort gap at the high school level. One of the most commonly discussed barriers is the expensive cost of attending selective universities, which motivated recent increases in need-based aid from selective universities. I develop a structural model of students’ learning, application, and admission processes, and estimate it with the Education Longitudinal Study of 2002, a nationally representative sample. I control for other types of barriers for low-income students such as a lack of information or low high school quality. I allow elevated competition to affect behaviors of high-income students. I use a geographic variation in costs of attending home-state nonselective universities to control selection biases driven by an unobservable characteristic correlated with family income. I find that 6.9% of high-ability low-income students do not apply to selective universities because of borrowing constraints. If selective universities double the amount of grants per attending student from the bottom quintile of the income distribution the effort gap, as measured by the number of Advanced Placement (AP) classes taken, decreases by 33.4%, the achievement gap, as measured by the SAT score, by 20.2%, and the wage gap by 10.2% among students with the initial test scores in the top 20th percentile in 10th grade. The aggregate achievement score also increases because elevated competition raises the effort level of high ability applicants from all income backgrounds. ∗Department of Economics, Washington University in St. Louis; Email: [email protected] †I am deeply grateful to B. Ravikumar, Limor Golan, and Carl Sanders for their guidance and support. I also thank Goerge-Levi Gayle, Juan Pantano, Yongseok Shin, John Nachbar, Bruce Petersen, Jungho Lee, and JungJae Park for valuable discussions and suggestions.
Author: Sunha Myong
Institution: Washington University in St. Louis
Language: English
Subfield: Education
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2747493872