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INVESTING in SCHOOLING in CHILE: the ROLE of INFORMATION ABOUT FINANCIAL AID for HIGHER EDUCATION Taryn Dinkelman and Claudia Martı´Nez A.*

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INVESTING in SCHOOLING in CHILE: the ROLE of INFORMATION ABOUT FINANCIAL AID for HIGHER EDUCATION Taryn Dinkelman and Claudia Martı´Nez A.* INVESTING IN SCHOOLING IN CHILE: THE ROLE OF INFORMATION ABOUT FINANCIAL AID FOR HIGHER EDUCATION Taryn Dinkelman and Claudia Martı´nez A.* Abstract—We investigate the impacts of providing low-income Chilean advantage of it. These information constraints are likely to be adolescents with information about how to finance higher education and ask whether providing parents with the same information magnifies the especially binding in developing countries, where rapid edu- effects on schooling outcomes. We randomly assigned eighth graders and cation transitions mean that parents have little direct experi- some parents to receive information about aid for higher education. Expo- ence with systems of higher education. sure to information raised college preparatory high school enrollment, pri- mary school attendance, and financial aid knowledge, with gains concen- In this paper, we investigate whether relaxing this infor- trated among medium- and high-grade students. Parental exposure to mation constraint before high school even starts can information did not significantly magnify these effects. Our results increase investments in schooling at this early stage. To do demonstrate that access to relevant information about financial aid affects important schooling choices long before tertiary education begins. this, we randomly assigned over 6,000 eighth graders in 226 poor urban Chilean schools and some of their parents I. Introduction to receive standardized information (in the form of a short DVD program) about financial aid opportunities for higher INANCIAL aid programs for higher education are education. We measure the impact of this exposure on F remarkably common throughout the world. Almost all schooling investment choices (school attendance, school OECD countries, half of all African countries, one in three grades at the end of the year, and high school choice) three Latin American countries, and about one in six countries in to seven months later using survey and administrative data. Asia, including China, have means-tested loan or scholarship A novel aspect of our work is that we investigate whether programs for students pursuing higher education (Marcucci & delivering information to children together with their parents Johnstone 2010). These programs are often touted to broaden is substantially more effective at improving school outcomes access to higher education by relieving credit constraints for than providing the same information to children alone. Pre- 1 the poorest families. However, academic preparation for vious studies that analyze the impact of providing different financial aid eligibility is typically cumulative, starting long kinds of information on schooling outcomes have targeted before the end of high school. Lacking information about how information to either children or parents. We analyze how to finance higher education, families who might benefit most much new financial aid information matters for outcomes from this financial aid may end up being the least able to take and whether parental involvement magnifies these impacts by randomly allocating schools to a control group (no infor- Received for publication July 15, 2011. Revision accepted for publica- mation DVD), a Student treatment group (in which only chil- tion December 19, 2012. * Dinkelman: Dartmouth College, BREAD, and CEPR; Martı´nez A.: dren watch the DVD at school), or a Family treatment group Department of Economics, Faculty of Economics and Business, Univer- (in which we send a copy of the DVD program home with all sity of Chile. children and encourage them to share it with their parents). Funding for this project was provided by the Inter-American Develop- ment Bank, the Center for Economic Policy Studies at Princeton Univer- To our knowledge, this is the first study to investigate sity, and PEP-NET (Poverty and Economic Policy Research Network). whether parental learning about the higher education pro- We thank Claudia Peirano and her team, especially Valentina Rivera, duction function interacts with adolescent learning to affect Patricia Reyes, and Ilana Nussbaum, at the Centro de Microdatos at the 2 Universidad de Chile for their tireless work in project implementation; treatment response in a randomized experiment setting. Ana Marı´a Baeza and Paola Leiva at the Ministry of Education, Chile, for Our research has the potential to shed light on how early assistance with administrative data; and Alberto Chong (IDB) for his con- information about future financial aid is important for tinuous support of the study. We thank Patty Anderson, Erzo Luttmer, Nancy Qian, Tomas Rau, Sam Schulhofer-Wohl, Dean Yang, and seminar investments in schooling. Specifically, the results of our participants at Bocconi University, Eidaudi Institute for Economics and study can be used to answer three questions: (a) Does expo- Finance, the Harris School of Public Policy, MIT, Princeton, Yale, the sure to new information about financial aid for higher edu- University of Cape Town, Universidad de Chile, Universidad Cato´lica de Chile, Universidad Adolfo Iban˜ez, Impact Evaluation Network-LACEA, cation increase effort in school four years before the end of Universidad Diego Portales and the Rimini Conference in Economics and high school? (b) Does increasing parent knowledge magnify Finance (2010) for useful comments. A supplemental appendix is available online at http://www.mitpress any impacts? (c) Do either of these ways of delivering the journals.org/doi/suppl/10.1162/REST_a_00384. new information increase the likelihood of accessing finan- 1 There is evidence that credit constraints reduce access to higher edu- cial aid and continuing to higher education? cation for some families in the United States (Angrist, 1993; Dynarski, 2002, 2003; Bound & Turner, 2002), in Mexico (Kaufmann, 2008) and in Chile (Meneses et al., 2010; Solis, 2010). Concerns about low awareness of public financial aid and the complexity of applications in the United 2 The standard human capital investment model tends to consider a uni- States have motivated recent work exploring whether direct assistance tary decision maker, but recent empirical evidence suggests it may be with applying for financial aid just prior to college enrollment can important to consider whether parents or children are the relevant agents improve take-up among disadvantaged families (Bettinger et al., 2012). In in education decisions, since they may face different incentives (Berry, contrast, Carneiro and Heckman (2002) argue that credit constraints are 2009; Burztyn & Coffman, 2012), hold different expectations about far less important than the cumulative effect of early-life disadvantages desired level of education and costs of investing (Attanasio & Kaufmann, on college preparedness of students from low socioeconomic backgrounds 2009; Giustinelli, 2010), or be differentially forward looking (as sug- in the United States. gested in Gruber, 2001; Dobbie & Fryer, 2011). The Review of Economics and Statistics, May 2014, 96(2): 244–257 Ó 2014 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology Downloaded from http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00384 by guest on 01 October 2021 INVESTING IN SCHOOLING IN CHILE 245 We concentrate on addressing the first two questions, to the attendance and high school choice results. These het- since our respondents have not yet completed high school. erogeneous effects suggest that the students with better Using the experimental variation in school assignment to chances of qualifying for financial aid later (medium- and groups, we show that exposure to new information about high-grade students) were the ones most marginal for the financial aid availability and eligibility has important impacts improved education outcomes. on schooling behaviors in the short run. Exposure to treat- The behavioral responses to this information intervention ment raises the probability of enrolling in a college prepara- are important for several reasons. First, since there is mixed tory high school by about 6 percentage points (10%) among evidence on whether providing direct information about those students required to choose a new school in grade 9. school quality promotes more school choice, it is notable Exposure to the information DVD also significantly lowers that students exposed to the financial aid information in this the probability of being absent from school by between 8 DVD are more likely to enroll in college preparatory high and 10 percentage points (12% to 15%) three months after schools.4 The fact that a relatively small amount of infor- baseline. This reduced absenteeism does not translate into mation (provided at a cost of between $11 and $13 per stu- improved test scores at the end of grade 8, five months after dent; all dollar amounts are in U.S dollars) can have mean- the intervention. ingful impacts on enrollment is encouraging and suggests Our point estimates from the Intent to Treat comparisons that the right information provided at the right time might suggest slightly smaller effects of students being exposed to do a lot to promote school choice and, with it, improvements the information DVD at school (without parents) than of in educational outcomes in the longer run (Pop-Eleches & exposure at home (with parents). Given the design of our Urquiola, 2011). Second, since enrollment responds only experiment, we are able to reject that the Family treatment among the set of students constrained to choose a new has a significantly larger impact
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