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Why are high ability individuals from poor backgrounds under-represented at university?

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  • Buly A Cardak

    () (Department of Economics and Finance, La Trobe University)

  • Chris Ryan

    () (Social Policy Evaluation, Analysis and Research Centre, RSSS, Australian National University)

Abstract

We analyse data in which individuals from low socio-economic status (SES) backgrounds have lower university participation rates than those from higher SES backgrounds. Our focus is on the role played by credit constraints in explaining these different participation rates. We propose a multi-stage model of education where university participation is contingent on ability to pay and high school academic performance, which depends on family SES and innate student ability. We find no evidence that credit constraints deter high achieving students from attending university in Australia, a country with an income contingent loan scheme for higher education tuition fees. We do, however, find that how students convert their earlier school performance into the scores on which university entrance is based is contingent on their SES. That is, for students of similar ability, those from higher SES backgrounds are more likely to obtain university entrance scores and achieve higher scores if they do. Hence, policy interventions that rectify the credit constraint problem that faces individuals at the time they make university entrance decisions are not sufficient to equalize university participation across social groups.

Suggested Citation

  • Buly A Cardak & Chris Ryan, 2006. "Why are high ability individuals from poor backgrounds under-represented at university?," Working Papers 2006.04, School of Economics, La Trobe University.
  • Handle: RePEc:ltr:wpaper:2006.04
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    References listed on IDEAS

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    1. James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
    2. Lorraine Dearden & Javier Ferri & Costas Meghir, 2002. "The Effect Of School Quality On Educational Attainment And Wages," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 1-20, February.
    3. Chapman, Bruce, 1997. "Conceptual Issues and the Australian Experience with Income Contingent Charges for Higher Education," Economic Journal, Royal Economic Society, vol. 107(442), pages 738-751, May.
    4. Finnie, Ross & Laporte, Christine & Lascelles, Eric, 2004. "Family Background and Access to Post-secondary Education: What Happened over the 1990s?," Analytical Studies Branch Research Paper Series 2004226e, Statistics Canada, Analytical Studies Branch.
    5. Carneiro, Pedro & Heckman, James J., 2003. "Human Capital Policy," IZA Discussion Papers 821, Institute for the Study of Labor (IZA).
    6. Barsky R. & Bound J. & Charles K.K. & Lupton J.P., 2002. "Accounting for the Black-White Wealth Gap: A Nonparametric Approach," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 663-673, September.
    7. Chapman, Bruce, 2006. "Income Contingent Loans for Higher Education: International Reforms," Handbook of the Economics of Education, Elsevier.
    8. Chapman, Bruce & Ryan, Chris, 2005. "The access implications of income-contingent charges for higher education: lessons from Australia," Economics of Education Review, Elsevier, vol. 24(5), pages 491-512, October.
    9. Anh T. Le & Paul W. Miller, 2005. "Participation in Higher Education: Equity and Access?," The Economic Record, The Economic Society of Australia, vol. 81(253), pages 152-165, June.
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    Citations

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    Cited by:

    1. Bruce Chapman & Mark Rodrigues & Chris Ryan, 2008. "An Analysis of FEE-HELP in the Vocational Education and Training Sector," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 41(1), pages 1-14, March.
    2. Juan D. Barón & Deborah Cobb-Clark, 2010. "Are Young People's Educational Outcomes Linked to their Sense of Control?," Borradores de Economia 599, Banco de la Republica de Colombia.
    3. Buly A Cardak & Chris Ryan, 2007. "Participation in Higher Education: Equity and Access: Are Equity-based Scholarships an Answer?," Working Papers 2007.03, School of Economics, La Trobe University.
    4. Robert Tanton & Honge Gong & Ann Harding, 2011. "Multiple Generation Disadvantage: How Communities Affect the Outcomes of Different Generations," NATSEM Working Paper Series 11/05, University of Canberra, National Centre for Social and Economic Modelling.
    5. Nicolas Hérault & Guyonne Kalb, 2016. "Intergenerational correlation of labor market outcomes," Review of Economics of the Household, Springer, vol. 14(1), pages 231-249, March.
    6. Andrew Leigh & Chris Ryan, 2011. "Long-Run Trends in School Productivity: Evidence from Australia," Education Finance and Policy, MIT Press, vol. 6(1), pages 105-135, January.
    7. Bruce Chapman & Kiatanantha Lounkaew, 2009. "Reforming Youth Allowance: The "Independent-at-Home" Category," Economic Papers, The Economic Society of Australia, vol. 28(4), pages 304-309, December.
    8. Bruce Chapman, 2008. "The Australian University Student Financing System : The Rationale for, and Experience with, Income Contingent Loans," EABER Working Papers 21944, East Asian Bureau of Economic Research.
    9. Alison L. Booth & Pamela Katic, 2013. "Cognitive Skills, Gender and Risk Preferences," The Economic Record, The Economic Society of Australia, vol. 89(284), pages 19-30, March.
    10. Bruce Chapman, 2007. "Higher Education Financing in Australia," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(2), pages 55-61, 07.
    11. Bruce Chapman & Mark Rodrigues & Chris Ryan, 2007. "HECS for TAFE: The case for extending income contingent loans," Treasury Working Papers 2007-02, The Treasury, Australian Government, revised Apr 2007.

    More about this item

    Keywords

    university participation; credit constraints; ability EDIRC Provider-Institution: RePEc:edi:smlatau;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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