Levelling up? The Role of Need and Merit Based University Grants in Non-Selective Higher Education

Daniela Sonedda (), Marcello Matranga (), Gianluigi Vernasca (), Mariacristina Rossi () and Francesco Figari ()
Additional contact information
Daniela Sonedda: University of Insubria
Marcello Matranga: University of Piemonte Orientale
Gianluigi Vernasca: University of Essex
Mariacristina Rossi: University of Turin
Francesco Figari: University of Piemonte Orientale

No 18547, IZA Discussion Papers from IZA Network @ LISER

Abstract: We study the interaction between need- and merit-based university grants in a non-selective higher education system. Using administrative data from a northern Italian university, we analyse how eligibility criteria affect enrolment, academic performance, and labour market outcomes. We document a trade-off between the two criteria, with merit requirements acting as endogenous screening. We rationalise this trade-off with a three-period model predicting that merit thresholds increase effort among students with higher expected ability but may discourage effort among students at risk of falling short, as losing the grant reduces expected utility. We support these predictions using a difference-in-differences estimator for multiple treatments, separately analysing students switching into and out of need- and merit-based eligibility. Our results show that grants target disadvantaged but academically strong students, generate perverse incentive effects that vary by gender, and fail to retain a substantial share of initial recipients.

Keywords: university grants; educational outcomes; non selective higher education (search for similar items in EconPapers)
JEL-codes: I22 I23 J24 (search for similar items in EconPapers)
Date: 2026-04
New Economics Papers: this item is included in nep-edu, nep-eur and nep-lma
References: Add references at CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp18547.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp18547

Access Statistics for this paper

More papers in IZA Discussion Papers from IZA Network @ LISER Contact information at EDIRC.
Bibliographic data for series maintained by Mark Fallak ().