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The Effects of State Merit Aid Programs on Attendance at Elite Colleges

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  • David L. Sjoquist
  • John V. Winters

Abstract

State merit aid programs have been found to reduce the likelihood that students attend college out of state. Using the U.S. News & World Report (USNWR) rankings of colleges and universities to measure college quality and Integrated Postsecondary Education Data System data to measure enrollment, we explore how this reduction in out‐of‐state enrollment differs by the academic quality of the institution. Our difference‐in‐differences results suggest that state merit aid programs do not induce students to forgo attending top 15 ranked schools. However, state merit aid does induce some students to forgo attending out‐of‐state schools ranked below the top 15 and shifts them toward lower quality in‐state schools, so that the net effect is a reduction in academic quality, as measured by USNWR. These effects may have long‐term implications for students' degree completion rates and labor market earnings.

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  • David L. Sjoquist & John V. Winters, 2016. "The Effects of State Merit Aid Programs on Attendance at Elite Colleges," Southern Economic Journal, John Wiley & Sons, vol. 83(2), pages 527-549, October.
    • Handle: RePEc:wly:soecon:v:83:y:2016:i:2:p:527-549
    DOI: 10.1002/soej.12156
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    Cited by:

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    4. Kelchen, Robert & Ortagus, Justin & Rosinger, Kelly & Cassell, Alex, 2022. "The effects of state performance funding policies on student loan debt," Economics of Education Review, Elsevier, vol. 91(C).
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    6. Dennis A. Kramer & Justin C. Ortagus & T. Austin Lacy, 2018. "Tuition-Setting Authority and Broad-Based Merit Aid: The Effect of Policy Intersection on Pricing Strategies," Research in Higher Education, Springer;Association for Institutional Research, vol. 59(4), pages 489-518, June.
    7. Yi Lu & Hong Song, 2020. "The effect of educational technology on college students’ labor market performance," Journal of Population Economics, Springer;European Society for Population Economics, vol. 33(3), pages 1101-1126, July.
    8. French, Robert & Oreopoulos, Philip, 2017. "Behavioral barriers transitioning to college," Labour Economics, Elsevier, vol. 47(C), pages 48-63.
    9. Wang, Jiaxin & Huang, Hongyan & Huang, Xiang & Sun, Di & Song, Zilong, 2024. "Returning from overseas: STEMs migration and corporate digitalization," International Review of Financial Analysis, Elsevier, vol. 91(C).
    10. Sano, Shinpei, 2019. "The effect of student loans on college enrollment: Evidence from municipality panel data in Japan," Japan and the World Economy, Elsevier, vol. 52(C).
    11. Zachary Bleemer, 2022. "Affirmative Action, Mismatch, and Economic Mobility after California’s Proposition 209," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(1), pages 115-160.
    12. Braga, Breno & Malkova, Olga, 2020. "Hope for the Family: The Effects of College Costs on Maternal Labor Supply," IZA Discussion Papers 12958, Institute of Labor Economics (IZA).
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    More about this item

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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