Does Financial Aid for Top International Graduate Programs Boost Education and Earnings? Evidence from Colombia

43 Pages Posted: 20 May 2022

See all articles by Adriana Camacho

Adriana Camacho

Universidad de los Andes, Colombia - Department of Economics

Catherine Rodriguez

Universidad de los Andes, Colombia - Department of Economics

Fabio Sánchez

Universidad de los Andes, Colombia - Department of Economics

Date Written: May 16, 2022

Abstract

This paper estimates the impact of a postgraduate merit-based financial aid program in Colombia. Exploiting a regression discontinuity design using rich survey and administrative data, we find three main results by. First, credit constraints are binding and important even for talented individuals with higher education degrees. Our results indicate that financial aid beneficiaries increase their probability of attaining any graduate education by 33% and a graduate education at a top university abroad by 50%. Second, the labor market highly rewards this education. Beneficiary individuals earn an average a monthly labor income 45% higher than non-beneficiaries. Mediation analyses suggest that at least 50% of the impact is due to the signaling effect of being a financial aid scholar. Importantly, effects are driven by male candidates and in a higher proportion by those who attended private higher education institutions in their undergraduate studies. Third, back-of-the-envelope cost-benefit analyses suggest that this credit scholarship has a private and social IIR of 22% and 29%, respectively.

Keywords: merit-based financial aid, graduate education, returns to education, Colombia, International Studies, regression discontinuity

JEL Classification: I22, I23, I26

Suggested Citation

Camacho, Adriana and Rodriguez, Catherine and Sánchez Torres, Fabio, Does Financial Aid for Top International Graduate Programs Boost Education and Earnings? Evidence from Colombia (May 16, 2022). Documento CEDE No. 13, Available at SSRN: https://ssrn.com/abstract=4114667 or http://dx.doi.org/10.2139/ssrn.4114667

Adriana Camacho (Contact Author)

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

Catherine Rodriguez

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

Fabio Sánchez Torres

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia
+57 1 332 4495 (Phone)
+57 1 332 4492 (Fax)

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