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Liquidity constraints in free post-secondary education: Evidence from Colombia

Author

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  • Gamboa, Luis Fernando
  • Millán-Quijano, Jaime

Abstract

This paper provides evidence of the importance of liquidity constraints in a tuition-free post-secondary education setting in Colombia. We exploit exogenous variation in the relative cost of tuition-free vocational education from a nationwide cash transfer program. We show that eligibility for a USD 136 grant every other month increases enrollment by up to 12 percentage points. We also show that men with larger returns to education are more affected by the availability of grants, which is consistent with the presence of liquidity constraints. However, we do not find the same for women. This paper highlights the importance of non-tuition costs and discusses whether individuals under-invest in their human capital when free education is available.

Suggested Citation

  • Gamboa, Luis Fernando & Millán-Quijano, Jaime, 2023. "Liquidity constraints in free post-secondary education: Evidence from Colombia," Economics of Education Review, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:ecoedu:v:95:y:2023:i:c:s0272775723000808
    DOI: 10.1016/j.econedurev.2023.102433
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    More about this item

    Keywords

    Liquidity constraints; Tertiary education; Regression discontinuity;
    All these keywords.

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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