Association for Public Policy Analysis & Management

In this paper we illustrate the main empirical results of a research project aimed at evaluating the effectiveness of a grant provision, named Grant 5B, implemented in the Province of Trento (an area in the North-East of Italy) from 2009 to 2012, a period of recession for the Italian economy. The Grant 5B is a merit-based financial aid for students from low-income families devised to cover the opportunity costs connected to Higher Education (HE) participation. With its introduction policy makers aimed at (i) reversing a worrying negative decline in the progression to HE and at (ii) lessening social inequalities in the access to HE. The aim of our study is not only to provide empirical evidence on the effects of the Grant 5B on a number of outcomes related to HE participation and performance, but also to study how its impact varied across students from different socio-economic backgrounds and over time. 

The unique dataset used in this paper results from a linkage of survey data covering four consecutive cohorts of undergraduate students (2009-2012) and information from different administrative archives which allowed to retrieve detailed information on family income and assets and eligibility to the Grant 5B. Exploiting a regression discontinuity design we were able to estimate the causal effects of the Grant 5B on a number of outcomes related to university participation (such as enrolment probability, field of study, location of the university institution) and performance (such as drop out probability, average marks, credits obtained).

Our findings clearly show that the Grant 5B does not have any impact on enrolment probability, but it affects other decisions connected to university participation. We found that eligible students have a higher probability to enrol outside Trento in faculties that are not present at the local university (such as medicine, law, veterinary and architecture). Moreover, remarkable differences emerge with respect to parental education, with the Grant 5B exerting stronger effects for students from lower social background. Interestingly, the analysis over time reveals that there is a worrying decline of the impact of the Grant 5B in the last two cohorts. Considering the persistence of the economic crisis that strikes Italy starting from 2009 and the worsening of its consequences on labour market participation in 2011, it seems reasonable to link the persistence of the negative economic growth to students’ decision regarding university participation.

The empirical evidence provided in our study enables us to not only to contribute to the literature on liquidity constraints and university participation and academic performance, but also to show that the effectiveness of an educational programme aimed sustaining participation and reducing inequalities can vary according to the economic conditions of the system where the policy is implemented. This leads to the conclusion that, despite students’ decisions related to university participation depend on individual characteristics (liquidity constraints and motivations), the design of such programmes has to be based on a careful analysis of the socio-economic context where they are meant to be implemented.