Educational aspirations and decision-making in a context of poverty. A test of rational choice models in El Salvador

Previous research on educational aspirations and educational decision-making has mostly focused on high-income countries and thus on a relatively homogeneous socio-economic context. However, educational decision-making may be sensitive to contextual factors such as economic deprivation, a dysfunctional welfare state or poor access to credit markets - characteristics shared by most low- and middle-income countries. To better understand how economically disadvantaged individuals in developing countries make their educational choices, we conducted a survey based on a random sample with high school students in the rural department Morazán in El Salvador, a lower middle-income country in Latin America. Our results show that regardless of the social background, almost all students aspire to pursue tertiary education, probably due to the high tertiary degree premium in earnings and the high social benefits. However, the lack of possibilities to finance their studies generally prevents the realisation of these aspirations for lower social background students. While in high-income countries, cost factors are not very important in the decision-making process, the burden of costs explains around 45 percent of the social background effect in El Salvador. Other factors such as academic confidence, expected future economic benefits, parental status maintenance wish, individual risk aversion and time discounting preferences play only a minor role.