Pell Grants and Labor Supply: Evidence from a Regression Kink
Early Career Reseach Award
One concern in higher education policy is that students are taking longer to graduate. One possible reason for this observation is an increase in off campus labor market participation among college students. Financial aid may play a role in the labor-study choice of college students, where are college becomes more affordable, students may substitute away from work and towards increased study. I use data from the National Postsecondary Student Aid Study (NPSAS) to exploit non-linearity in the Pell Grant formula to estimate a regression kink and regression discontinuity designs. Preliminary results show that, conditional on receiving the minimum of $400, students reduce their labor supply by 2.4 hours per week which translates to a 11.3 percent decrease in hours worked. I will also test a number of educational outcomes including grades and credit hours to show whether this decrease in employment is beneficial to students.