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Skills, Schools, and Credit Constraints: Evidence from Massachusetts

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  • Joshua Goodman

    () (John F. Kennedy School of Government, Harvard University)

Abstract

Low college enrollment rates among low-income students may stem from a combination of credit constraints, low academic skill, and low-quality schools. Recent Massachusetts data allow the first use of school district fixed effects in the analysis of credit constraints, leading to four findings. First, low-income students in Massachusetts have lower intended college enrollment rates than higher income students but also have dramatically lower skills and attend lower-quality school districts. Second, inclusion of skill controls greatly reduces but does not eliminate this intended enrollment gap. Third, inclusion of school district fixed effects has little further impact, with low-income students eight percentage points less likely to intend enrollment than higher income students of the same skill and from the same school district. Fourth, medium- and high-skilled low-income students appear the most constrained. State governments could use the methods employed here to target financial aid more efficiently. © 2009 American Education Finance Association

Suggested Citation

  • Joshua Goodman, 2010. "Skills, Schools, and Credit Constraints: Evidence from Massachusetts," Education Finance and Policy, MIT Press, vol. 5(1), pages 36-53, January.
  • Handle: RePEc:tpr:edfpol:v:5:y:2010:i:1:p:36-53
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/edfp.2009.5.1.5103
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    Cited by:

    1. Figlio, D. & Karbownik, K. & Salvanes, K.G., 2016. "Education Research and Administrative Data," Handbook of the Economics of Education, Elsevier.
    2. María Noelia Garbero, 2012. "Efectos de las restricciones de liquidez en la acumulación de capital humano: evidencia para Nicaragua," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 53-95, January-D.
    3. Pan, Weixiang & Ost, Ben, 2014. "The impact of parental layoff on higher education investment," Economics of Education Review, Elsevier, vol. 42(C), pages 53-63.
    4. María Noelia Garbero, 2012. "Un análisis de los efectos de las restricciones de liquidez en la acumulación de capital humano: Evidencia para Nicaragua," CEDLAS, Working Papers 0136, CEDLAS, Universidad Nacional de La Plata.
    5. Tomás Rau & Eugenio Rojas & Sergio Urzúa, 2013. "Loans for Higher Education: Does the Dream Come True?," NBER Working Papers 19138, National Bureau of Economic Research, Inc.
    6. repec:ucp:jlabec:doi:10.1086/696204 is not listed on IDEAS
    7. Ben Ost & Weixiang Pan & Douglas Webber, 2018. "The Returns to College Persistence for Marginal Students: Regression Discontinuity Evidence from University Dismissal Policies," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 779-805.

    More about this item

    Keywords

    credit constraints; academic skill; low-quality schools; financial aid;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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