Why are high ability individuals from poor backgrounds under-represented at university?

Buly Cardak and Christopher Ryan

No 2006.04, Working Papers from School of Economics, La Trobe University

Abstract: We analyse data in which individuals from low socio-economic status (SES) backgrounds have lower university participation rates than those from higher SES backgrounds. Our focus is on the role played by credit constraints in explaining these different participation rates. We propose a multi-stage model of education where university participation is contingent on ability to pay and high school academic performance, which depends on family SES and innate student ability. We find no evidence that credit constraints deter high achieving students from attending university in Australia, a country with an income contingent loan scheme for higher education tuition fees. We do, however, find that how students convert their earlier school performance into the scores on which university entrance is based is contingent on their SES. That is, for students of similar ability, those from higher SES backgrounds are more likely to obtain university entrance scores and achieve higher scores if they do. Hence, policy interventions that rectify the credit constraint problem that faces individuals at the time they make university entrance decisions are not sufficient to equalize university participation across social groups.

Keywords: university participation; credit constraints; ability EDIRC Provider-Institution: RePEc:edi:smlatau (search for similar items in EconPapers)
JEL-codes: I21 I22 I28 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (21)

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