Equal Opportunity through Higher Education: Theory and Evidence on Privilege and Ability

Arbeitspapier

We model a higher education system that admits students according to their admission signal (e.g., matriculation GPA, SAT), which is, in turn, affected by their cognitive ability and socioeconomic background. We show that subsidizing education loans increases neither human capital stock nor aggregate consumption, but only yields income redistribution mainly among the upper class. We show that the policies aimed at compensating for poor socioeconomic background result in a higher aggregate consumption, as well as income redistribution from top to bottom. We test the model using a unique dataset that includes proxies of socioeconomic background and cognitive ability. Results show that the high school matriculation GPA is a weak predictor of academic achievements. We demonstrate that, while the high school matriculation GPA is explained by proxies of cognitive ability and socioeconomic background, academic GPA is solely explained by cognitive ability proxies. Finally, the lack of a matriculation certificate is associated with a poor socioeconomic background.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 10564

Classification and Topics

• Classification: Wirtschaft ; Survey Methods; Sampling Methods ; Personal Income, Wealth, and Their Distributions ; Externalities ; Educational Finance; Financial Aid ; Education: Government Policy ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
• Subject: higher education ; human capital formation ; income inequality ; socioeconomic background ; subsidies

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Arbel, Yuval ; Bar-El, Ronen ; Tobol, Yossi
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/161187
• Last update: 10.03.2025, 11:43 AM CET