Liquidity constraints and free post-secondary education. Evidence from Colombia

Jaime Millan-Quijano Luis Fernando Gamboa

No 02/2021, NCID Working Papers from Navarra Center for International Development, University of Navarra

Abstract: This paper provides new evidence on the importance of short-run liquidity constraints in a tuition-free post- secondary education setting. We exploit two sources of exogenous variation in enrollment in free tertiary education to disentangle the role played by liquidity constraints, and show that eligibility for financial aid increases enrollment by 11.9 percentage points. We show that individuals with larger returns to education are more affected by the availability of grants. In contrast, when variation in enrollment is not derived from changes in the relative cost of education, compliers to such variation are not necessarily individuals with large returns to education. Our results support the hypothesis that low-income youths encounter liquidity constraints, even when entering free tertiary education.

Keywords: Liquidity constraints; tertiary education; regression discontinuity. (search for similar items in EconPapers)
JEL-codes: C36 I26 J21 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2021-05
New Economics Papers: this item is included in nep-dev and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:nva:unnvaa:wp02-2021

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