Association for Public Policy Analysis & Management

One concern in American higher education is the increasing time that it takes the average undergraduate to complete college. One main reason that students take so long is that more undergraduates are working while attending college. I use nonlinearities in the Pell Grant formula to identify the causal effect of Pell Grants on student labor supply. Using a combined regression discontinuity/regression kink approach, I find that the marginal Pell recipient (receiving only $200) reduces labor force participation by 5.67 percent and (conditional on working) reduces the number of hours worked by 1.2 hours per week.