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Post-Secondary Attendance by Parental Income in the U.S. and Canada: What Role for Financial Aid Policy?

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  • Philippe Belley
  • Marc Frenette
  • Lance Lochner

Abstract

This paper examines the implications of tuition and need-based financial aid policies for family income – post-secondary (PS) attendance relationships. We first conduct a parallel empirical analysis of the effects of parental income on PS attendance for recent high school cohorts in both the U.S. and Canada using data from the 1997 Cohort of the National Longitudinal Survey of Youth and Youth in Transition Survey. We estimate substantially smaller PS attendance gaps by parental income in Canada relative to the U.S., even after controlling for family background, adolescent cognitive achievement, and local residence fixed effects. We next document that U.S. public tuition and financial aid policies are actually more generous to low-income youth than are Canadian policies. By contrast, Canada offers more generous aid to middle-class youth than does the U.S. These findings suggest that the much stronger family income – PS attendance relationship in the U.S. is not driven by differences in the need-based nature of financial aid policies. Based on previous estimates of the effects of tuition and aid on PS attendance, we consider how much stronger income – attendance relationships would be in the absence of need-based aid and how much additional aid would need to be offered to lower income families to eliminate existing income – attendance gaps entirely.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17218.

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Date of creation: Jul 2011
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Publication status: published as Belley, Philippe, Marc Frenette, and Lance Lochner, “Post-Secondary Attendance by Parental Income in the U.S. and Canada: Do Financial Aid Policies Explain the Differences?” Canadian Journal of Economics, forthcoming.
Handle: RePEc:nbr:nberwo:17218

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References

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  1. Keane, Michael P & Wolpin, Kenneth I, 2001. "The Effect of Parental Transfers and Borrowing Constraints on Educational Attainment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 1051-1103, November.
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  5. Dynarski, Susan, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 629-62, September.
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  9. Katharine G. Abraham & Melissa A. Clark, 2006. "Financial Aid and Students’ College Decisions: Evidence from the District of Columbia Tuition Assistance Grant Program," Journal of Human Resources, University of Wisconsin Press, vol. 41(3).
  10. Philippe Belley & Marc Frenette & Lance Lochner, 2010. "Post-Secondary Attendance by Parental Income: Comparing the U.S. and Canada," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20103, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
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Cited by:
  1. Lance Lochner & Alexander Monge-Naranjo, 2012. "Credit Constraints in Education," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20121, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  2. Corak, Miles, 2013. "Income Inequality, Equality of Opportunity, and Intergenerational Mobility," IZA Discussion Papers 7520, Institute for the Study of Labor (IZA).
  3. Rui Castro & Michel Poitevin, 2013. "Éducation et frais de scolarité," CIRANO Burgundy Reports 2013rb-01, CIRANO.

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