ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare

Jeffrey Denning, Benjamin Marx and Lesley Turner

No 23860, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate effects of the largest U.S. federal grant for college students using administrative data from Texas four-year public colleges and a discontinuity in grant generosity. Eligibility for additional grant aid significantly increases degree receipt and earnings beginning four years after entry. Estimated increases in income tax payments fully recoup government expenditures within ten years. A theoretical model shows that welfare effects of changes in college prices depend on (1) externalities from recipients’ behavioral responses and (2) facilitation of intertemporal consumption smoothing. Calibration suggests that increasing grant aid for low-income college students would enhance welfare in many U.S. settings.

JEL-codes: D14 D15 D61 H21 H52 I22 (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-pbe
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Published as Jeffrey T. Denning & Benjamin M. Marx & Lesley J. Turner, 2019. "ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare," American Economic Journal: Applied Economics, vol 11(3), pages 193-224.

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Journal Article: ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare (2019)
Working Paper: ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare (2018)
Working Paper: ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare (2017)
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