The Effect of Grants on University Drop-Out Rates: Evidence on the Italian Case

28 Pages Posted: 22 Jan 2020

See all articles by Francesca Modena

Francesca Modena

Bank of Italy

Enrico Rettore

University of Trento; IRVAPP; IZA

Giulia Tanzi

Bank of Italy

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Abstract

In this paper we evaluate the impact of need-based grants on university drop-out rates in the first year of enrollment, using student-level administrative data from all Italian universities in the period 2003-2013. We exploit the fact that not all eligible students receive financial aid due to limited resources to generate a treatment and a control group. Using this partition, we estimate the average treatment effect, i.e. the average effect on low income students, controlling for a set of observable characteristics by running regressions on blocks defined on the propensity score. Results point towards a sizeable effect of grants in reducing dropping out from higher education: around one third of these students would have left university in the first year in absence of the grants. This evidence is robust to a variety of specifications and sample selection criteria.

Keywords: human capital, higher education, university dropout, student financial aid, blocking with regression adjustment

JEL Classification: I22, I23, C21, C35

Suggested Citation

Modena, Francesca and Rettore, Enrico and Tanzi, Giulia, The Effect of Grants on University Drop-Out Rates: Evidence on the Italian Case. IZA Discussion Paper No. 12886, Available at SSRN: https://ssrn.com/abstract=3521704

Francesca Modena (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Enrico Rettore

University of Trento ( email )

Via Verdi 26
Trento, 28122
Italy
+39 0461 281316 (Phone)

IRVAPP ( email )

Via Santa Croce 77
Trento, I-38122
Italy

IZA ( email )

Giulia Tanzi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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