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Credit Constraints and the Racial Gap in Post-Secondary Education in South Africa

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  • David Lam
  • Cally Ardington
  • Nicola Branson
  • Murray Leibbrandt

Abstract

This paper analyzes the impact of high school household income and scholastic ability on post-secondary enrollment in South Africa. Using longitudinal data from the Cape Area Panel Study (CAPS), we analyze the large racial gaps in the proportion of high school graduates who enroll in university and other forms of post-secondary education. Our results indicate that family background and high school achievement (measured by a literacy and numeracy exam and performance on the grade 12 matriculation exam) are strong predictors of post-secondary enrollment and statistically account for all of the black-white difference in enrollment. Controlling for parental education and baseline scholastic ability reduces the estimated impact of household income on university enrollment, though there continues to be an effect at the top of the income distribution. We also find evidence of credit constraints on non-university forms of post-secondary enrollment. Counterfactual estimates indicate that if all South Africans had the incomes of the richest whites, African university enrollment would increase by 65%, even without changing parental education or high school academic achievement. The racial gap in university enrollment would narrow only slightly, however as our results suggest that this gap in postsecondary enrollment results mainly from the large racial gap in high school academic achievement.

Suggested Citation

  • David Lam & Cally Ardington & Nicola Branson & Murray Leibbrandt, 2013. "Credit Constraints and the Racial Gap in Post-Secondary Education in South Africa," NBER Working Papers 19607, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19607
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    References listed on IDEAS

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    1. Lance J. Lochner & Alexander Monge-Naranjo, 2011. "The Nature of Credit Constraints and Human Capital," American Economic Review, American Economic Association, vol. 101(6), pages 2487-2529, October.
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    6. Lam, David & Ardington, Cally & Leibbrandt, Murray, 2011. "Schooling as a lottery: Racial differences in school advancement in urban South Africa," Journal of Development Economics, Elsevier, vol. 95(2), pages 121-136, July.
    7. Marc Gurgand & Adrien Lorenceau & Thomas Mélonio, 2011. "Student loans: Liquidity constraint and higher education in South Africa," Working Papers halshs-00590898, HAL.
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    11. Haroon Bhorat & Morne Oosthuizen, 2009. "Determinants of Grade 12 Pass Rates in the Post-Apartheid South African Schooling System," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 18(4), pages 634-666, August.
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    Cited by:

    1. Asmus Zoch, 2013. "Life chances and class: Estimating inequality of opportunity in South Africa for various life stages," Working Papers 08/2013, Stellenbosch University, Department of Economics.
    2. Nicola Branson & Julia Garlick & David Lam & Murray Leibbrandt, 2012. "Education and Inequality: The South African Case," SALDRU Working Papers 75, Southern Africa Labour and Development Research Unit, University of Cape Town.
    3. David Lam, 2011. "How the World Survived the Population Bomb: Lessons From 50 Years of Extraordinary Demographic History," Demography, Springer;Population Association of America (PAA), vol. 48(4), pages 1231-1262, November.
    4. Kezia Lilenstein & Ingrid Woolard & Murray Leibbrandt, 2016. "In-Work Poverty in South Africa: The Impact of Income Sharing in the Presence of High Unemployment," SALDRU Working Papers 193, Southern Africa Labour and Development Research Unit, University of Cape Town.
    5. Pugatch, Todd, 2012. "Bumpy Rides: School to Work Transitions in South Africa," IZA Discussion Papers 6305, Institute of Labor Economics (IZA).
    6. Nicola Branson & Amy Kahn, 2016. "The Post Matriculation Enrolment Decision: Do Public Colleges Provide Students with a Viable Alternative? Evidence from the First Four Waves of the National Income Dynamics Study," SALDRU Working Papers 182, Southern Africa Labour and Development Research Unit, University of Cape Town.

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    More about this item

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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