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Does financial aid for top international graduate programs boost education and earnings? Evidence from Colombia

Author

Listed:
  • Adriana Camacho
  • Catherine Rodríguez
  • Fabio Sanchez

Abstract

This paper estimates the impact of a postgraduate merit-based financial aid program in Colombia. Exploiting a regression discontinuity design using rich survey and administrative data, we find three main results by. First, credit constraints are binding and important even for talented individuals with higher education degrees. Our results indicate that financial aid beneficiaries increase their probability of attaining any graduate education by 33% and a graduate education at a top university abroad by 50%. Second, the labor market highly rewards this education. Beneficiary individuals earn an average a monthly labor income 45% higher than non-beneficiaries. Mediation analyses suggest that at least 50% of the impact is due to the signaling effect of being a financial aid scholar. Importantly, effects are driven by male candidates and in a higher proportion by those who attended private higher education institutions in their undergraduate studies. Third, back-of-the-envelope cost-benefit analyses suggest that this credit scholarship has a private and social IIR of 22% and 29%, respectively.

Suggested Citation

  • Adriana Camacho & Catherine Rodríguez & Fabio Sanchez, 2022. "Does financial aid for top international graduate programs boost education and earnings? Evidence from Colombia," Documentos CEDE 20124, Universidad de los Andes, Facultad de Economía, CEDE.
  • Handle: RePEc:col:000089:020124
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    File URL: https://repositorio.uniandes.edu.co/bitstream/handle/1992/57321/dcede2022-13.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Merit-based financial aidGraduate educationReturns to educationColombiaInternational StudiesRegression discontinuity;

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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