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High School Track Choice and Liquidity Constraints: Evidence from Urban Mexico

Author

Listed:
  • Avitabile, Ciro

    (World Bank)

  • Bobba, Matteo

    (Toulouse School of Economics)

  • Pariguana, Marco

    (University of Edinburgh)

Abstract

We study how a large household windfall affects sorting of relatively disadvantaged youth over high school tracks by exploiting the discontinuity in the assignment of a welfare program in Mexico. The in-cash transfer is found to significantly increase the probability of selecting vocational schools as the most preferred options vis-a-vis other more academically oriented education modalities. We find support for the hypothesis that the transfer relaxes the liquidity constraints preventing relatively poor students from choosing a schooling career with higher out-of-pocket expenditures and higher expected returns. The observed change in stated preferences across tracks effectively alters school placement, and bears a positive effect on on-time graduation.

Suggested Citation

  • Avitabile, Ciro & Bobba, Matteo & Pariguana, Marco, 2017. "High School Track Choice and Liquidity Constraints: Evidence from Urban Mexico," IZA Discussion Papers 10506, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10506
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    References listed on IDEAS

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    Cited by:

    1. Florent Bédécarrats & Isabelle Guérin & François Roubaud, 2019. "All that Glitters is not Gold. The Political Economy of Randomized Evaluations in Development," Development and Change, International Institute of Social Studies, vol. 50(3), pages 735-762, May.
    2. Florent BEDECARRATS & Isabelle GUERIN & François ROUBAUD, 2017. "L'étalon-or des évaluations randomisées : économie politique des expérimentations aléatoires dans le domaine du développement," Working Paper 753120cd-506f-4c5f-80ed-7, Agence française de développement.
    3. Dustan, Andrew, 2020. "Can large, untargeted conditional cash transfers increase urban high school graduation rates? Evidence from Mexico City's Prepa Sí," Journal of Development Economics, Elsevier, vol. 143(C).
    4. Rohen d’Aiglepierre & Arthur Bauer, 2017. "Teacher training based on the results of research on their actual practices in the context of Sub-Saharan Africa: The OPERA project in Burkina Faso, issues and challenges," Working Paper cacf7616-2ec5-4da2-93df-8, Agence française de développement.

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    More about this item

    Keywords

    school choice; tracking; financial constraints; vocational education; returns to education; regression discontinuity design;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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