Who benefits from student aid? The economic incidence of tax-based federal student aid

Federal benefit programs, including federal student aid, are designed to aid targeted populations. Behavioral responses to these programs may alter the incidence of their benefits, a possibility that receives less attention in the literature compared to tax incidence. I demonstrate the importance of benefit incidence analysis by showing that the intended cost reductions of tax-based federal student aid are substantially offset by institutional price increases for a sample of 4-year colleges and universities. Contrary to the goal of policymakers, I find that tax-based aid crowds out institutional aid roughly dollar-for-dollar. Unfortunately, it is not clear how institutions utilize these captured resources, so that the ultimate incidence of the programs is uncertain.     

Measuring the earnings returns to lifelong learning in the UK

This paper examines the earnings returns to learning that takes place following the conventional ‘school-to-work’ stage of the life-course. We operationalise such ‘lifelong learning’ as the attainment of certified qualifications in adulthood, following the completion of the first period of continuous full-time education. Using data from the British Household Panel Survey (BHPS) for the period 1991–2006, our approach and findings represent an important addition to the existing evidence base. By using annual data, we are able to employ the fixed effects estimator, which eliminates the problem of time-invariant unobserved heterogeneity. Our dynamic specification uses a lag structure to consider how earnings returns evolve in the medium and longer run, whilst also controlling for wage trends which were evident prior to qualification attainment. Our results show a medium-run return for women of 10% on hourly wages. For men, initial suggestions of a similar positive return are eliminated once pre-qualification trends are taken into account. This suggests that adult learning has a causal effect on women's subsequent earnings but, for men, any apparent gain is due to selection.     

Pennies from heaven? Using exogenous tax variation to identify effects of school resources on pupil achievement

Evidence on the effectiveness of school inputs remains inconclusive, partly due to the challenge of identification as families sort themselves into school districts and resources are potentially allocated to compensate (or reinforce) differences in pupil abilities. Using variation in school resources induced by the location of waterfalls in Norway, we examine the effect of school expenditures on pupil performance at age 16. Higher school expenditures, triggered by higher revenues from local taxes on hydropower plants, have a significantly positive effect on pupil performance. This positive IV estimate contrasts a zero effect based on least squares. A downward biased estimate using a standard cross section estimator is expected in a context of compensating resource allocation across educational units.     

The redistributive equity of affirmative action: Exploring the role of race,socioeconomic status,and gender in college admissions

This paper contributes to research on affirmative action by examining issues of equity in the context of racial quotas in Brazil. We study the experience of the University of Brasilia, which established racial quotas in 2004 reserving 20% of available admissions slots for students who self-identified as black. Based on university admissions data and a student survey conducted by the authors, we find evidence that race, socioeconomic status, and gender were considerable barriers to college attendance and achievement. For example, first-difference regressions involving pairs of siblings indicate that black identity and gender had a negative effect on entrance exam scores. Moreover, we compare displaced and displacing applicants and find that racial quotas helped promote equity to some extent. Nevertheless, the scale and scope of redistribution were highly limited, and the vast majority of Brazilians had little chance of attending college, suggesting that more still needs to be done.     

Choices for studying choice: Assessing charter school effectiveness using two quasi-experimental methods

Two quasi-experimental methods – fixed effects (FE) and virtual control records (VCR) – were used to measure charter schooling in 14 states and two districts. The new VCR method uses all available observable charter student characteristics and prior performance to create a composite comparison record. A head-to-head comparison of the FE and VCR methods used the same charter students to test the FE control (e.g., the charter student's own traditional public school experience) and the VCR for equivalence. The comparison produced highly similar estimates; charter coefficients were identical in sign and significance and of the same general magnitudes. In an analysis of the sampling fractions included in each method using all available tested charter students, the VCR method was found to produce more generalizable results. In the policy analysis, charter school quality was found to be demographically and geographically uneven with only 19 percent of charter schools outperforming their local markets.     

How to improve pupils’ literacy? A cost-effectiveness analysis of a French educational project

The Action Lecture program is an innovative teaching method run in some nursery and primary schools in Paris and designed to improve pupils’ literacy. We report the results of an evaluation of this program. We describe the experimental protocol that was built to estimate the program's impact on several types of indicators. Data were processed following a Differences-in-Differences (DID) method. Then we use the estimation of the impact on academic achievement to conduct a cost-effectiveness analysis and take a reduction of the class size program as a benchmark. The results are positive for the Action Lecture program.     

Measuring the effect of charter schools on public school student achievement in an urban environment: Evidence from New York City

This paper uses student level data from New York City to study the relationship between a public school losing enrollment to charter school competitors and the academic achievement of students who remain enrolled in it. Geographic measures most often used to study the effect of school choice policies on public school student achievement are not well suited for densely populated urban environments. I adopt a direct approach and measure charter school exposure as the percentage of a public school's students who exited for a charter school at the end of the previous year. Depending on model specification, I find evidence that students in schools losing more students to charter schools either are unaffected by the competitive pressures of the choice option or benefit mildly in both math and English.     

Funding higher education and wage uncertainty: Income contingent loan versus mortgage loan

We propose a simple theoretical model which shows how the combined effect of wage uncertainty and risk aversion can modify the individual willingness to pay for a HE system financed by an ICL or a ML. We calibrate our model using real data from the 1970 British Cohort Survey together with the features of the English HE financing system. We allow for individual heterogeneity by considering different family backgrounds and occupations. We find that graduates from poor families, males and graduates working in the private sector are more willing to pay to switch to an ICL. Using the UK Labour Force Survey we evaluate the distributive effects of our model. We compute the repayment burdens and taxpayer subsidies for average, low and high earnings graduates. The results confirm the important insurance benefits of an ICL compared to a ML, with lower burdens and higher subsidies for poorer graduates.     

Do tuition fees affect enrollment behavior? Evidence from a ‘natural experiment’ in Germany

This paper uses the introduction of tuition fees in seven of the sixteen German states in 2007 as a natural experiment to identify the effects of tuition prices on enrollment probabilities. Based on information on enrollment decisions of the entire population of high-school graduates between 2002 and 2008, I find a negative effect of tuition fees on enrollment behavior. The effect is larger than in existing studies for European countries, but of a similar magnitude as effects identified with U.S. data. A potential spill-over effect of the policy intervention to the comparison group is accounted for by using the estimation results to calibrate a structural model of the enrollment decision.     

Adolescent drug use and the deterrent effect of school-imposed penalties

Estimates of the effect of school-imposed penalties for drug use on a student's consumption of marijuana are biased if both are determined by unobservable school or individual attributes. Reverse causality is also a potential challenge to retrieving estimates of the causal relationship, as the severity of school sanctions may simply reflect the need for more-severe sanctions. Using the National Longitudinal Study of Adolescent Health, I offer an instrumental-variables approach to retrieving an estimate of the causal response of marijuana use to sanctions and thereby demonstrate the efficacy of school-imposed penalties as a deterrent to adolescent drug use. This suggests that school sanctions may have important long-run benefits.