Why are High-Ability Individuals from Poor Backgrounds Under-Represented at University?

42 Pages Posted: 13 Jul 2006

See all articles by Buly A. Cardak

Buly A. Cardak

La Trobe University - School of Economics

Chris Ryan

University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Date Written: June 2006

Abstract

We analyse data in which individuals from low socioeconomic status (SES) backgrounds have lower university participation rates than those from higher SES backgrounds. Our focus is on the role played by credit constraints in explaining these different participation rates. We propose a multistage model of education where university participation is contingent on ability to pay and high school academic performance, which depends on family SES and innate student ability. We find no evidence that credit constraints deter high achieving students from attending university in Australia, a country with an income contingent loan scheme for higher education tuition fees. We do, however, find that how students convert their earlier school performance into the scores on which university entrance is based is contingent on their SES. That is, for students of similar ability, those from higher SES backgrounds are more likely to obtain university entrance scores and achieve higher scores if they do. Hence, policy interventions that rectify the credit constraint problem that faces individuals at the time they make university entrance decisions are not sufficient to equalize university participation across social groups.

Keywords: university participation, credit constraints, ability

JEL Classification: I21, I22, I28

Suggested Citation

Cardak, Buly and Ryan, Chris, Why are High-Ability Individuals from Poor Backgrounds Under-Represented at University? (June 2006). Available at SSRN: https://ssrn.com/abstract=914025 or http://dx.doi.org/10.2139/ssrn.914025

Buly Cardak (Contact Author)

La Trobe University - School of Economics ( email )

Bundoora
Bundoora, Victoria 3083 3086
Australia
+61 3 9479 3419 (Phone)
+61 3 9479 1654 (Fax)

Chris Ryan

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

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