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Cash-on-Hand & College Enrollment: Evidence from Population Tax Data and Policy Nonlinearities

  • Dayanand S. Manoli
  • Nicholas Turner

We estimate causal effects of tax refunds (cash-on-hand) on college enrollment using population-level administrative data from United States income tax returns. We implement two separate research designs based on tax refunds from the Earned Income Tax Credit (EITC). First, we exploit a nonlinearity in the tax refund schedule that results from the kink point between the phase-in and maximum credit portions of the schedule. Second, we use policy expansions in the EITC phase-out region. Both approaches yield similar results that suggest tax refunds received in the spring of the high school senior year have meaningful effects on college enrollment.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19836.

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Date of creation: Jan 2014
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Handle: RePEc:nbr:nberwo:19836
Note: CH ED LS PE
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  1. Ralph Stinebrickner & Todd Stinebrickner, 2008. "The Effect of Credit Constraints on the College Drop-Out Decision: A Direct Approach Using a New Panel Study," American Economic Review, American Economic Association, vol. 98(5), pages 2163-84, December.
  2. Raj Chetty & John N. Friedman & Emmanuel Saez, 2012. "Using Differences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings," NBER Working Papers 18232, National Bureau of Economic Research, Inc.
  3. Caroline M. Hoxby & Christopher Avery, 2012. "The Missing "One-Offs": The Hidden Supply of High-Achieving, Low Income Students," NBER Working Papers 18586, National Bureau of Economic Research, Inc.
  4. David E. Card & David S. Lee & Zhuan Pei & Andrea Weber, 2012. "Nonlinear Policy Rules and the Identification and Estimation of Causal Effects in a Generalized Regression Kink Design," NRN working papers 2012-14, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  5. Gordon B. Dahl & Lance Lochner, 2010. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20105, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  6. Janet Currie & Enrico Moretti, 2003. "Mother'S Education And The Intergenerational Transmission Of Human Capital: Evidence From College Openings," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1495-1532, November.
  7. Turner, Nicholas, 2011. "The Effect Of Tax-Based Federal Student Aid On College Enrollment," National Tax Journal, National Tax Association, vol. 64(3), pages 839-61, September.
  8. Stephen V. Cameron & Christopher Taber, 2004. "Estimation of Educational Borrowing Constraints Using Returns to Schooling," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 132-182, February.
  9. Michael F. Lovenheim, 2011. "The Effect of Liquid Housing Wealth on College Enrollment," Journal of Labor Economics, University of Chicago Press, vol. 29(4), pages 741 - 771.
  10. Solis, Alex, 2013. "Credit Access and College Enrollment," Working Paper Series 2013:12, Uppsala University, Department of Economics.
  11. Helena Skyt Nielsen & Torben Sørensen & Christopher Taber, 2010. "Estimating the Effect of Student Aid on College Enrollment: Evidence from a Government Grant Policy Reform," NBER Chapters, in: Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), pages 185-215 National Bureau of Economic Research, Inc.
  12. Susan M. Dynarski, 1999. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," NBER Working Papers 7422, National Bureau of Economic Research, Inc.
  13. Damon Jones, 2012. "Inertia and Overwithholding: Explaining the Prevalence of Income Tax Refunds," American Economic Journal: Economic Policy, American Economic Association, vol. 4(1), pages 158-85, February.
  14. Emmanuel Saez, 2010. "Do Taxpayers Bunch at Kink Points?," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 180-212, August.
  15. Lance J. Lochner, 2009. "The Nature of Credit Constraints and Human Capital," 2009 Meeting Papers 745, Society for Economic Dynamics.
  16. Raj Chetty & John N. Friedman & Nathaniel Hilger & Emmanuel Saez & Diane Whitmore Schanzenbach & Danny Yagan, 2010. "How Does Your Kindergarten Classroom Affect Your Earnings? Evidence From Project STAR," NBER Working Papers 16381, National Bureau of Economic Research, Inc.
  17. Milligan, Kevin & Moretti, Enrico & Oreopoulos, Philip, 2004. "Does education improve citizenship? Evidence from the United States and the United Kingdom," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1667-1695, August.
  18. Enrico Moretti, 2002. "Estimating the Social Return to Higher Education: Evidence From Longitudinal and Repeated Cross-Sectional Data," NBER Working Papers 9108, National Bureau of Economic Research, Inc.
  19. Marc Gurgand & Adrien Lorenceau & Thomas Mélonio, 2011. "Student loans: Liquidity constraint and higher education in South Africa," PSE Working Papers halshs-00590898, HAL.
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