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High School Track Choice and Liquidity Constraints: Evidence from Urban Mexico

Author

Listed:
  • Avitabile, Ciro

    () (University of Surrey)

  • Bobba, Matteo

    () (Toulouse School of Economics)

  • Pariguana, Marco

    () (University of Western Ontario)

Abstract

We study how a large household windfall affects sorting of relatively disadvantaged youth over high school tracks by exploiting the discontinuity in the assignment of a welfare program in Mexico. The in-cash transfer is found to significantly increase the probability of selecting vocational schools as the most preferred options vis-a-vis other more academically oriented education modalities. We find support for the hypothesis that the transfer relaxes the liquidity constraints preventing relatively poor students from choosing a schooling career with higher out-of-pocket expenditures and higher expected returns. The observed change in stated preferences across tracks effectively alters school placement, and bears a positive effect on on-time graduation.

Suggested Citation

  • Avitabile, Ciro & Bobba, Matteo & Pariguana, Marco, 2017. "High School Track Choice and Liquidity Constraints: Evidence from Urban Mexico," IZA Discussion Papers 10506, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10506
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    References listed on IDEAS

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    More about this item

    Keywords

    school choice; tracking; financial constraints; vocational education; returns to education; regression discontinuity design;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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