Estimating the Effect of Student Aid on College Enrollment: Evidence from a Government Grant Policy Reform

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Estimating the Effect of Student Aid on College Enrollment: Evidence from a Government Grant Policy ReformHelena Skyt Nielsen Torben Sørensen Christopher Taber The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. In this paper, we investigate the responsiveness of the demand for college to changes in student aid arising from a Danish reform. We separately identify the effect of aid from that of other observed and unobserved variables such as parental income. We exploit the combination of a kinked aid scheme and a reform of the student aid scheme to identify the effect of direct costs on college enrollment. To allow for heterogeneous responses due to borrowing constraints, we use detailed information on parents' assets. We find that enrollment is less responsive than found in other studies and that the presence of borrowing constraints only deters college enrollment to a minor extent.JEL Classification: I22, J24

Assessing the Welfare Effects of Unemployment Benefits Using the Regression Kink Design

“…The figures for recent state UI replacement rates come from the Department of Labor and can be found at http://workforcesecurity.doleta.gov/unemploy/ui_replacement_rates.asp 25 There has been recently a considerable interest for RK designs in the applied economics literature. References include Nielsen, Sandoslash;rensen and Taber [2010], Card et al [2012], Dong [2010] or Simonsen, Skipper and Skipper [2010]. The term sharp RK design means that everyone is a complier and obeys the same treatment assignment rule.…”

Inference on Causal Effects in a Generalized Regression Kink Design

“…As noted by Classen (1977a), Welch (1977), Guryan (2001), Dahlberg et al (2008), Nielsen et al (2010) and Simonsen et al (Forthcoming), a kinked assignment rule holds out the possibility for identification of the policy variable effect even in the absence of traditional instruments. The idea is to look for an induced kink in the mapping between the assignment variable and the outcome variable that coincides with the kink in the policy rule, and compare the relative magnitudes of the two kinks.…”

“…The TT (or ing) use a kinked relationship between total expenditure on prescription drugs and their marginal price to study the price sensitivity of demand for prescription drugs. Nielsen et al (2010), who introduce the term "Regression Kink Design" for this approach, use a kinked student aid scheme to identify the effect of direct costs on college enrollment. Nielsen et al (2010) make precise the assumptions needed to identify the causal effects in the constanteffect, additive model…”

Equity and the Social Dimension: An Overview [Overview Paper]

“…in family income). Neilsen et al (2008) use a Danish late-1980s student aid reform which mainly benefitted upper-income students to show that a $1000 change in aid increases participation rates by a little over 1 % (it was hypothesized that the smaller price response effect in Denmark was due to the fact that costs were lower to begin with). Baumgartner and Steiner (2006), applying similar techniques to a 2001 improvement in the German Bafog system, found insignificant effects of a change in costs.…”