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Equal Opportunity through Higher Education: Theory and Evidence on Privilege and Ability

Author

Listed:
  • Arbel, Yuval

    (School of Business, Carmel Academic Center)

  • Bar-El, Ronen

    (Open University of Israel)

  • Tobol, Yossef

    (Jerusalem College of Technology (JTC))

Abstract
We model a higher education system that admits students according to their admission signal (e.g., matriculation GPA, SAT), which is, in turn, affected by their cognitive ability and socioeconomic background. We show that subsidizing education loans increases neither human capital stock nor aggregate consumption, but only yields income redistribution mainly among the upper class. We show that the policies aimed at compensating for poor socioeconomic background result in a higher aggregate consumption, as well as income redistribution from top to bottom. We test the model using a unique dataset that includes proxies of socioeconomic background and cognitive ability. Results show that the high school matriculation GPA is a weak predictor of academic achievements. We demonstrate that, while the high school matriculation GPA is explained by proxies of cognitive ability and socioeconomic background, academic GPA is solely explained by cognitive ability proxies. Finally, the lack of a matriculation certificate is associated with a poor socioeconomic background.

Suggested Citation

  • Arbel, Yuval & Bar-El, Ronen & Tobol, Yossef, 2017. "Equal Opportunity through Higher Education: Theory and Evidence on Privilege and Ability," IZA Discussion Papers 10564, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10564
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    File URL: https://docs.iza.org/dp10564.pdf
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    Cited by:

    1. Eyal Bar-Haim & Carmel Blank, 2019. "Second-Chance Alternatives and Maintained Inequality in Access to Higher Education in Israel," Social Inclusion, Cogitatio Press, vol. 7(1), pages 28-37.

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    More about this item

    Keywords

    higher education; human capital formation; income inequality; socioeconomic background; subsidies;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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