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Credit Constraints and the Racial Gap in Post-Secondary Education in South Africa

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  • David Lam
  • Cally Ardington
  • Nicola Branson
  • Murray Leibbrandt

Abstract

This paper analyzes the impact of high school household income and scholastic ability on post-secondary enrollment in South Africa. Using longitudinal data from the Cape Area Panel Study (CAPS), we analyze the large racial gaps in the proportion of high school graduates who enroll in university and other forms of post-secondary education. Our results indicate that family background and high school achievement (measured by a literacy and numeracy exam and performance on the grade 12 matriculation exam) are strong predictors of post-secondary enrollment and statistically account for all of the black-white difference in enrollment. Controlling for parental education and baseline scholastic ability reduces the estimated impact of household income on university enrollment, though there continues to be an effect at the top of the income distribution. We also find evidence of credit constraints on non-university forms of post-secondary enrollment. Counterfactual estimates indicate that if all South Africans had the incomes of the richest whites, African university enrollment would increase by 65%, even without changing parental education or high school academic achievement. The racial gap in university enrollment would narrow only slightly, however as our results suggest that this gap in postsecondary enrollment results mainly from the large racial gap in high school academic achievement.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19607.

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Date of creation: Nov 2013
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Handle: RePEc:nbr:nberwo:19607

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References

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  1. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post-Secondary Schooling," NBER Working Papers 9055, National Bureau of Economic Research, Inc.
  2. Marc Gurgand & Adrien Lorenceau & Thomas Mélonio, 2011. "Student loans: Liquidity constraint and higher education in South Africa," PSE Working Papers halshs-00590898, HAL.
  3. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Journal of Human Capital, University of Chicago Press, University of Chicago Press, vol. 1(1), pages 37-89.
  4. Lance J. Lochner & Alexander Monge-Naranjo, 2011. "The Nature of Credit Constraints and Human Capital," American Economic Review, American Economic Association, American Economic Association, vol. 101(6), pages 2487-2529, October.
  5. Stephen V. Cameron & James J. Heckman, 2001. "The Dynamics of Educational Attainment for Black, Hispanic, and White Males," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 109(3), pages 455-499, June.
  6. Anne Case & Angus Deaton, 1999. "School Inputs And Educational Outcomes In South Africa," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(3), pages 1047-1084, August.
  7. 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, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 1051-1103, November.
  8. David Lam & Cally Ardington & Murray Leibbrandt, 2007. "Schooling as a Lottery: Racial Differences in School Advancement in Urban South Africa," Working Papers 56, Economic Research Southern Africa.
  9. Nicholas Spaull, 2012. "Poverty & Privilege: Primary School Inequality in South Africa," Working Papers 13/2012, Stellenbosch University, Department of Economics.
  10. Haroon Bhorat & Morne Oosthuizen, 2009. "Determinants of Grade 12 Pass Rates in the Post-Apartheid South African Schooling System," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 18(4), pages 634-666, August.
  11. Nicola Branson & David Lam & Linda Zuze, 2012. "Education: Analysis of the NIDS Wave 1 and 2 Datasets," SALDRU Working Papers, Southern Africa Labour and Development Research Unit, University of Cape Town 81, Southern Africa Labour and Development Research Unit, University of Cape Town.
  12. Servaas van der Berg, 2007. "Apartheid's Enduring Legacy: Inequalities in Education-super- 1," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 16(5), pages 849-880, November.
  13. Michael F. Lovenheim, 2011. "The Effect of Liquid Housing Wealth on College Enrollment," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 29(4), pages 741 - 771.
  14. Yamauchi, Futoshi, 2005. "Race, equity, and public schools in post-Apartheid South Africa: Equal opportunity for all kids," Economics of Education Review, Elsevier, Elsevier, vol. 24(2), pages 213-233, April.
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Cited by:
  1. Asmus Zoch, 2013. "Life chances and class: Estimating inequality of opportunity in South Africa for various life stages," Working Papers 08/2013, Stellenbosch University, Department of Economics.
  2. Nicola Branson & Julia Garlick & David Lam & Murray Leibbrandt, 2012. "Education and Inequality: The South African Case," SALDRU Working Papers, Southern Africa Labour and Development Research Unit, University of Cape Town 75, Southern Africa Labour and Development Research Unit, University of Cape Town.
  3. David Lam, 2011. "How the World Survived the Population Bomb: Lessons From 50 Years of Extraordinary Demographic History," Demography, Springer, Springer, vol. 48(4), pages 1231-1262, November.
  4. Pugatch, Todd, 2012. "Bumpy Rides: School to Work Transitions in South Africa," IZA Discussion Papers 6305, Institute for the Study of Labor (IZA).

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