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Cash-on-Hand and College Enrollment: Evidence from Population Tax Data and the Earned Income Tax Credit

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  • Day Manoli
  • Nicholas Turner

Abstract

We estimate causal effects of cash-on-hand on college enrollment decisions of students from low-income families. Using population-level, administrative data from US income tax returns, we exploit variation in tax refunds received in the spring of the high school senior year. The variation in tax refunds results from the kink point between the phase-in and maximum credit portions of the Earned Income Tax Credit schedule. The results suggest tax refunds received in the spring of the high school senior year have meaningful effects on college enrollment.

Suggested Citation

  • Day Manoli & Nicholas Turner, 2018. "Cash-on-Hand and College Enrollment: Evidence from Population Tax Data and the Earned Income Tax Credit," American Economic Journal: Economic Policy, American Economic Association, vol. 10(2), pages 242-271, May.
    • Handle: RePEc:aea:aejpol:v:10:y:2018:i:2:p:242-71
    Note: DOI: 10.1257/pol.20160298
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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