Pell Grants and Labor Supply: Evidence from a Regression Kink

Arbeitspapier

A concern in higher education policy is that students are taking longer to graduate. One possible reason for this observation is an increase in off-campus labor market participation among college students. Financial aid may play a role in the labor/study choice of college students-as college becomes more affordable, students may substitute away from work and toward increased study. I use data from the National Postsecondary Student Aid Study (NPSAS) to exploit nonlinearity in the Pell Grant formula to estimate a regression kink and regression discontinuity designs. I find that conditional on receiving the minimum of $550, students reduce their labor supply by 0.4 hours per week, which translates to a 2.4 percent decrease in hours worked. Students who receive the average Pell Grant of $2,250 are 7.6 percentage points (or around 12 percent) less likely to work and, if working, supply 5.10 less hours per week, or around a 30.67 percent reduction. I find Pell Grants do increase academic achievement, implying that students substitute study time for work.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 15061

Classification and Topics

• Classification: Wirtschaft ; Educational Finance; Financial Aid ; Higher Education; Research Institutions ; Demand and Supply of Labor: General
• Subject: Pell Grants ; financial aid ; regression kink ; labor supply

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kofoed, Michael S.
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/252185
• Last update: 10.03.2025, 11:42 AM CET