Propelled: The Effects of Grants on Graduation, Earnings, and Welfare

41 Pages Posted: 25 Sep 2017 Last revised: 13 Mar 2022

See all articles by Jeffrey Denning

Jeffrey Denning

Brigham Young University

Benjamin Marx

University of Illinois at Urbana-Champaign

Lesley Turner

University of Maryland

Multiple version iconThere are 2 versions of this paper

Date Written: September 2017

Abstract

We estimate effects of the largest U.S. federal grant for college students using administrative data from Texas four-year public colleges and a discontinuity in grant generosity. Eligibility for additional grant aid significantly increases degree receipt and earnings beginning four years after entry. Estimated increases in income tax payments fully recoup government expenditures within ten years. A theoretical model shows that welfare effects of changes in college prices depend on (1) externalities from recipients’ behavioral responses and (2) facilitation of intertemporal consumption smoothing. Calibration suggests that increasing grant aid for low-income college students would enhance welfare in many U.S. settings.

Suggested Citation

Denning, Jeffrey and Marx, Benjamin and Turner, Lesley, Propelled: The Effects of Grants on Graduation, Earnings, and Welfare (September 2017). NBER Working Paper No. w23860, Available at SSRN: https://ssrn.com/abstract=3042436

Jeffrey Denning (Contact Author)

Brigham Young University ( email )

Provo, UT 84602
United States

Benjamin Marx

University of Illinois at Urbana-Champaign ( email )

Lesley Turner

University of Maryland ( email )

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