Panel Paper:
The Impact of Family Income on the College Experience: Evidence from the Earned Income Tax Credit
Saturday, November 4, 2017
Wrigley (Hyatt Regency Chicago)
*Names in bold indicate Presenter
Today's college students have different experiences than their predecessors. They work more hours at non-academic jobs, study less, and take longer to finish their degrees. Why? We know that family income is an important predictor of college entry and graduation. We know less about socioeconomic gaps in student experiences once enrolled. These gaps are important. Differences in college experiences may cause persistence and graduation rate differences. Even among college finishers, experience gaps may cause different returns to education investment.
In this paper I test how increased family income affects student behavior in college. I exploit state and Federal variation in Earned Income Tax Credit (EITC) schedules. Extra yearly EITC benefits from age 10 to age 18 cause students to work less during the school year and finish their degrees faster. Expansions affect students whose parents likely qualify for the EITC and the effects are strongest for poorer students. Students who live in areas with higher tuition have stronger responses. The results suggest students substitute family resources for in-college earnings, hastening time-to-degree.
