Do Loans for Higher Education Lead to Better Salaries? Evidence from a Regression Discontinuity Approach for Colombia

44 Pages Posted: 31 Oct 2014

See all articles by Fabio Sánchez

Fabio Sánchez

Universidad de los Andes, Colombia - Department of Economics

Tatiana Velasco

Teachers College, Columbia University; Universidad de los Andes, Colombia, School of Government ; Universidad de los Andes, Colombia - Department of Economics

Date Written: October 16, 2014

Abstract

Since 2002 the ACCES credit for higher education has financed more than 280,000 students. Prior evaluations have shown evidence as to its positive effect on the academic performance and the reduction in the dropout rates of the recipients. Nevertheless, no evidence exists so far on the effect these credit programs have had on the labor market indicators of their beneficiaries. In this study we attempt to estimate such effect. In particular, the question we seek to answer is if, once working as graduates, do the beneficiaries of ACCES loans have higher salaries and if this is the case, why does this happen and through which channels does it occur. Using administrative data for more than 300 thousand applicants of this credit in Colombia and using a regression discontinuity design, we found that the recipients of the ACCES educational credit have starting salaries as graduates which are higher in comparison with those graduates not receiving this credit. We also undertake a mediation methodology within an Intent-to-Treat Regression Discontinuity framework that allows for a precise identification and quantification of the mediation channels. We concluded that once graduated, the ACCES beneficiaries’ exhibit longer job search periods, which would substantially explain their greater starting salaries of their first formal jobs. Academic performance during college also account for the differences in starting salaries yet to lesser degree.

Keywords: higher education, educational credit, regression discontinuity, job market

JEL Classification: 122, 123, 125

Suggested Citation

Sánchez Torres, Fabio and Velasco, Tatiana, Do Loans for Higher Education Lead to Better Salaries? Evidence from a Regression Discontinuity Approach for Colombia (October 16, 2014). Documento CEDE No. 2014-41, Available at SSRN: https://ssrn.com/abstract=2516506 or http://dx.doi.org/10.2139/ssrn.2516506

Fabio Sánchez Torres (Contact Author)

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

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Santafe de Bogota, AA4976
Colombia
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+57 1 332 4492 (Fax)

Tatiana Velasco

Teachers College, Columbia University ( email )

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New York, NY 10027
United States

Universidad de los Andes, Colombia, School of Government ( email )

Cra 1. No. 19 - 27. Bloque Aulas Tercer piso
Bogotá D.C.
Colombia
3394949 ext: 2073 (Phone)

HOME PAGE: http://gobierno.uniandes.edu.co/

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

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

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