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

Listed author(s):
  • Avitabile, Ciro

    ()

    (University of Surrey)

  • Bobba, Matteo

    ()

    (Toulouse School of Economics)

  • Pariguana, Marco

    ()

    (University of Western Ontario)

Registered author(s):

    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.

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    File URL: http://ftp.iza.org/dp10506.pdf
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    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10506.

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    Length: 48 pages
    Date of creation: Jan 2017
    Handle: RePEc:iza:izadps:dp10506
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    1. Gordon B. Dahl & Lance Lochner, 2012. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," American Economic Review, American Economic Association, vol. 102(5), pages 1927-1956, August.
    2. Alessandro Tarozzi & Jaikishan Desai & Kristin Johnson, 2015. "The Impacts of Microcredit: Evidence from Ethiopia," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 54-89, January.
    3. Christopher Blattman & Nathan Fiala & Sebastian Martinez, 2014. "Generating Skilled Self-Employment in Developing Countries: Experimental Evidence from Uganda," The Quarterly Journal of Economics, Oxford University Press, vol. 129(2), pages 697-752.
    4. González-Flores, Mario & Heracleous, Maria & Winters, Paul, 2012. "Leaving the Safety Net: An Analysis of Dropouts in an Urban Conditional Cash Transfer Program," World Development, Elsevier, vol. 40(12), pages 2505-2521.
    5. Matteo Bobba & Verónica Frisancho, 2016. "Learning about Oneself: The Effects of Performance Feedback on School Choice," IDB Publications (Working Papers) 94078, Inter-American Development Bank.
    6. repec:oup:qjecon:v:129:y:2014:i:2:p:697-752. is not listed on IDEAS
    7. Matteo Bobba, 2013. "Liquidity, Risk, and Occupational Choices," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 491-511.
    8. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    9. Roland Fryer & Steven Levitt & John List, 2015. "Parental Incentives and Early Childhood Achievement: A Field Experiment in Chicago Heights," Framed Field Experiments 00587, The Field Experiments Website.
    10. Justine S. Hastings & Jeffrey M. Weinstein, 2008. "Information, School Choice, and Academic Achievement: Evidence from Two Experiments," The Quarterly Journal of Economics, Oxford University Press, vol. 123(4), pages 1373-1414.
    11. Solis, Alex, 2013. "Credit Access and College Enrollment," Working Paper Series 2013:12, Uppsala University, Department of Economics.
    12. Orazio Attanasio & Adriana Kugler & Costas Meghir, 2011. "Subsidizing Vocational Training for Disadvantaged Youth in Colombia: Evidence from a Randomized Trial," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 188-220, July.
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