On the Design of Grant Assignment Rules

55 Pages Posted: 14 Apr 2021

Date Written: December 22, 2020

Abstract

One of the main goals of grants is to reduce dropout rates. In this paper, we assess how different assignment rules target different students and how they affect dropout rates in the first year of enrollment. The analysis uses administrative data from all Italian universities for the period 2003-13. We find that awarding the grant to all eligible students would significantly increase public expenses, with only a slight reduction in the dropout rate. Since we find that the grants have a heterogeneous effect according to students’ characteristics, assignment rules keeping the number of grants constant have an impact on dropout rates. In particular, targeting high-performing students would minimize dropout rates amongst grant recipients, but it would slightly increase the overall dropout rate. On the other hand, targeting those who benefit the most achieves the maximum reduction in dropout rates at the cost of increasing the number of grant recipient dropouts.

Keywords: grants, treatment assignment, university dropouts

JEL Classification: C25, I21, I22

Suggested Citation

Modena, Francesca and Pereda Fernández, Santiago and Tanzi, Giulia, On the Design of Grant Assignment Rules (December 22, 2020). Bank of Italy Temi di Discussione (Working Paper) No. 1307, Available at SSRN: https://ssrn.com/abstract=3822247 or http://dx.doi.org/10.2139/ssrn.3822247

Francesca Modena

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Santiago Pereda Fernández

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Giulia Tanzi (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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