Opportunities for Social Mobility Promote Effort: Evidence from a Nationwide Scholarship Program in Colombia

• Development Workshop

Date and Location

Monday, April 24, 2017, 4:10 PM - 5:30 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities

Abstract

Lack of social mobility remains one of the greatest challenges for developing and developed countries. This paper analyzes how new opportunities provided by a large scholarship program led to large substantial improvements in the academic results of eligible students. In doing so, we provide new evidence on the ex-ante, motivational effects of scholarships. We focus on Ser Pilo Paga (SPP), a nationwide merit and needs-based scholarship in Colombia, which funds the tuition for the university of their choice and additional living costs, for 10,000 new students per year since 2014. We exploit the sharp eligibility rules to identify the ex-ante effects of SPP on student performance in the national high school exit exam. First, we focus on the needs-based eligibility threshold and separately use a Difference in Difference (DD) and a Regression Discontinuity Design (RDD). We find that the opportunity provided by the scholarship leads to a large and significant reduction in the initial gap in the grades of the eligible students compared to the non-eligible students, especially at the top of the performance distribution. Second, we use a different RDD in which we use the eligibility rule in the test scores to explore an additional role-model motivational effect. We find that students’ performance is enhanced when a peer from their same school received the scholarship in the previous year. Taken together, we provide new evidence on the way in which the lack of opportunities discourages low income students from putting effort in their education, which then harms their human capital accumulation and contributes to the persistence of inequality.