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The Intended and Unintended Impacts of a Merit-Based Financial Aid Program for the Poor: The Case of Ser Pilo Paga

Author

Listed:
  • Juliana Londono-Velez
  • Catherine Rodriguez
  • Fabio Sánchez?

Abstract

We study a recent merit-based financial program for the poor in Colombia. We exploit sharp eligibility rules in household wealth and standardized test scores to identify the causal effect of financial aid on postsecondary enrollment and academic performance. We find large positive effects on postsecondary enrollment on both the extensive and intensive margins. Immediate enrollment doubled among eligible students, making the SES gap in enrollment disappear among top students. At the intensive margin, the program shifted students from low-quality institutions into higher-quality institutions, and from public to private colleges. We also observe significant general equilibrium effects in secondary and postsecondary education. The program promoted class diversity at top private schools, and significantly raised student quality at these institutions (but not public institutions). Demand for top private education shifted to the right, driving admission rates downward and increasing entry competition at these institutions, thus raising stratification by ability. However, program beneficiaries did not fully crowd out high-SES students from top private schools because supply also expanded. Finally, the program seems to have raised high school exit test performance among recent cohorts with relatively poor backgrounds.

Suggested Citation

  • Juliana Londono-Velez & Catherine Rodriguez & Fabio Sánchez?, 2017. "The Intended and Unintended Impacts of a Merit-Based Financial Aid Program for the Poor: The Case of Ser Pilo Paga," Documentos CEDE 15466, Universidad de los Andes, Facultad de Economía, CEDE.
  • Handle: RePEc:col:000089:015466
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    References listed on IDEAS

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    Cited by:

    1. Laajaj, Rachid & Moya, Andrés & Sánchez, Fabio, 2022. "Equality of opportunity and human capital accumulation: Motivational effect of a nationwide scholarship in Colombia," Journal of Development Economics, Elsevier, vol. 154(C).
    2. Pablo Medina & Natalia Ariza & Pablo Navas & Fernando Rojas & Gina Parody & Juan Alejandro Valdivia & Roberto Zarama & Juan Felipe Penagos, 2018. "An Unintended Effect of Financing the University Education of the Most Brilliant and Poorest Colombian Students: The Case of the Intervention of the Ser Pilo Paga Program," Complexity, Hindawi, vol. 2018, pages 1-9, December.
    3. Susan Dynarski & C.J. Libassi & Katherine Michelmore & Stephanie Owen, 2018. "Closing the Gap: The Effect of a Targeted, Tuition-Free Promise on College Choices of High-Achieving, Low-Income Students," NBER Working Papers 25349, National Bureau of Economic Research, Inc.
    4. Agurto Adrianzén, Marcos & Fiestas Chevez, Hugo & Nuñez Morales, Wenceslao & Quevedo, Valeria & Vegas Chiyón, Susana, 2019. "Study-group diversity and early college academic outcomes: Experimental evidence from a higher education inclusion program in Peru," Economics of Education Review, Elsevier, vol. 72(C), pages 131-146.

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    More about this item

    Keywords

    postsecondary enrollment; financial aid; inequality; Colombia; Ser Pilo Paga;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • 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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