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Financial incentives and study duration in higher education

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  • Trude Gunnes

    (Department of Economics, Norwegian University of Science and Technology)

  • Lars J. Kirkebøen
  • Marte Rønning

Abstract

The current paper investigates to which extent students in higher education respond to financial incentives by adjusting their study behavior. Students in Norway who completed certain graduate study programs between 1991 and 1995 on stipulated time were entitled to a restitution (of approximately 3,000 USD) from the Norwegian State Educational Loan Fund. Using a difference-in-difference approach, we find that the fraction of students graduating on time during the reform period increased by 10 percent, relative to a base probability of about 25 percent. The estimated effect for fully treated students (students who were aware of the reform from the start of their studies) is much higher, at 50 percent.

Suggested Citation

  • Trude Gunnes & Lars J. Kirkebøen & Marte Rønning, 2011. "Financial incentives and study duration in higher education," Working Paper Series 11511, Department of Economics, Norwegian University of Science and Technology.
    • Handle: RePEc:nst:samfok:11511
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    Cited by:

    1. Mikola, Derek & Webb, Matthew D., 2023. "Finish it and it is free: An evaluation of college graduation subsidies," Economics of Education Review, Elsevier, vol. 93(C).
    2. Cockx, B. & Declercq, Koen & Dejemeppe, Muriel, 2022. "Losing prospective entitlement to unemployment benefits. Impact on educational attainment," ROA Research Memorandum 003, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    3. Hämäläinen, Ulla & Koerselman, Kristian & Uusitalo, Roope, 2017. "Graduation Incentives Through Conditional Student Loan Forgiveness," IZA Discussion Papers 11142, Institute of Labor Economics (IZA).
    4. Chadi, Adrian & de Pinto, Marco & Schultze, Gabriel, 2019. "Young, gifted and lazy? The role of ability and labor market prospects in student effort decisions," Economics of Education Review, Elsevier, vol. 72(C), pages 66-79.
    5. Matsuda, Kazushige & Mazur, Karol, 2022. "College education and income contingent loans in equilibrium," Journal of Monetary Economics, Elsevier, vol. 132(C), pages 100-117.
    6. Declercq, Koen & Verboven, Frank, 2018. "Enrollment and degree completion in higher education without admission standards," Economics of Education Review, Elsevier, vol. 66(C), pages 223-244.
    7. Aina, Carmen & Baici, Eliana & Casalone, Giorgia & Pastore, Francesco, 2018. "The economics of university dropouts and delayed graduation: a survey," GLO Discussion Paper Series 189, Global Labor Organization (GLO).
    8. Aina, Carmen & Baici, Eliana & Casalone, Giorgia & Pastore, Francesco, 2019. "Delayed Graduation and University Dropout: A Review of Theoretical Approaches," IZA Discussion Papers 12601, Institute of Labor Economics (IZA).
    9. Kelly Foley & Fane Groes, 2021. "Admissions Constraints and the Decision to Delay University," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(2), pages 478-507, April.
    10. Silva, Polyana Tenório de Freitas e & Sampaio, Luciano Menezes Bezerra, 2023. "Does student aid make a degree more likely? Evidence of the permanence scholarship program from survival models," International Journal of Educational Development, Elsevier, vol. 96(C).
    11. Susanna Sten-Gahmberg, 2020. "Student Heterogeneity and Financial Incentives in Graduate Education: Evidence from a Student Aid Reform," Education Finance and Policy, MIT Press, vol. 15(3), pages 543-580, Summer.

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    More about this item

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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