Daniela Sonedda (Università degli studi dell’Insubria)

Levelling up? Targeted students of university grants based on wealth and skills

Abstract: We investigate how students self-select into university grants based on their wealth and skills. Using a difference-in-differences estimator on educational and labour market outcomes, we analyse the mechanisms behind each treatment independently, namely the wealth and skill requirements. By isolating the wealth requirement, we find no clear evidence of liquidity constraints. Instead, we observe that students who would have performed well even without the grant are more likely to receive it. Those who are unable to meet the minimum university credit requirement tend to refrain from applying, anticipating that they may need to return the received grants. Furthermore, we uncover perverse disincentives stemming from the grant policy, with students prioritising the maintenance of the grant over improving their academic performance. This phenomenon is observed across both female and male students, although it appears to be more pronounced among females.