Working Papers
State Merit Aid and the Supply Curve of Higher Education (Job Market Paper, with Kenneth Troske)
Abstract
Financial aid is ubiquitous in higher education. A fundamental goal of giving financial aid to students is to lessen financial barriers to attending higher education. An unintended consequence of increasing financial aid generosity is that higher education institutions may raise prices in response to higher demand for their services. Previous research largely focuses on estimating price responses to increases in financial aid generosity. We estimate the elasticity of supply of higher education to quantify institutions’ response to changes in state-sponsored merit grant programs. Our approach has two main advantages: the elasticity of supply determines the price response, and it captures institutions’ ability to respond to changes in financial aid policy by changing enrollments. We find that public four-year institutions have an estimated elasticity of supply of 2.1 and private non-profit four-year institutions have an estimated elasticity of 1.31. Based on these results, we conclude that the institutional response to these programs did not inhibit their intended effect of increasing postsecondary enrollments.
Abstract
Financial aid is ubiquitous in higher education. A fundamental goal of giving financial aid to students is to lessen financial barriers to attending higher education. An unintended consequence of increasing financial aid generosity is that higher education institutions may raise prices in response to higher demand for their services. Previous research largely focuses on estimating price responses to increases in financial aid generosity. We estimate the elasticity of supply of higher education to quantify institutions’ response to changes in state-sponsored merit grant programs. Our approach has two main advantages: the elasticity of supply determines the price response, and it captures institutions’ ability to respond to changes in financial aid policy by changing enrollments. We find that public four-year institutions have an estimated elasticity of supply of 2.1 and private non-profit four-year institutions have an estimated elasticity of 1.31. Based on these results, we conclude that the institutional response to these programs did not inhibit their intended effect of increasing postsecondary enrollments.
glick_jmp.pdf |
Works in Progress
College Admissions and Investment as a Dynamic Game
Estimating the Impact of the Kentucky CAP Grant over the Long-run
Estimating the Impact of the Kentucky CAP Grant over the Long-run