Does financial aid for top international graduate programs boost education and earnings? Evidence from Colombia

Adriana Camacho, Catherine Rodriguez and Fabio Sanchez Torres

No 20124, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: This paper estimates the impact of a postgraduate merit-based financial aid program in Colombia. Exploiting a regression discontinuity design using rich survey and administrative data, we find three main results by. First, credit constraints are binding and important even for talented individuals with higher education degrees. Our results indicate that financial aid beneficiaries increase their probability of attaining any graduate education by 33% and a graduate education at a top university abroad by 50%. Second, the labor market highly rewards this education. Beneficiary individuals earn an average a monthly labor income 45% higher than non-beneficiaries. Mediation analyses suggest that at least 50% of the impact is due to the signaling effect of being a financial aid scholar. Importantly, effects are driven by male candidates and in a higher proportion by those who attended private higher education institutions in their undergraduate studies. Third, back-of-the-envelope cost-benefit analyses suggest that this credit scholarship has a private and social IIR of 22% and 29%, respectively.

Keywords: Merit-based; financial; aidGraduate; educationReturns; to; educationColombiaInternational; StudiesRegression; discontinuity (search for similar items in EconPapers)
JEL-codes: I22 I23 I26 (search for similar items in EconPapers)
Pages: 43
Date: 2022-05-16
New Economics Papers: this item is included in nep-edu, nep-lam and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:020124

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