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Parental Resources and College Attendance: Evidence from Lottery Wins

Listed author(s):
  • George Bulman
  • Robert Fairlie
  • Sarena Goodman
  • Adam Isen

We examine more than one million children whose parents won a state lottery to trace out the effect of financial resources on college attendance. The analysis links the universe of federal tax records to federal financial aid records and leverages substantial variation in the size and timing of lottery wins. The results reveal that, while the per-dollar effect is modest (i.e., about 0.6 percentage point for every $100,000 of winnings), the relationship between win size and attendance is only weakly concave, with a high upper bound for amounts that greatly exceed the cost of college. The effects are smaller among lower-SES households, are not sensitive to how early in adolescence the resource shock occurs, and persist through each of the four years after high school. Finally, while additional resources reduce financial aid, attendance patterns are not moderated by this crowd-out. Overall, the results imply that households derive consumption value from college and that, in the current policy environment, financial constraints alone do not inhibit college attendance.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 22679.

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Date of creation: Sep 2016
Handle: RePEc:nbr:nberwo:22679
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