Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/252185 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 15061
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
A concern in higher education policy is that students are taking longer to graduate. One possible reason for this observation is an increase in off-campus labor market participation among college students. Financial aid may play a role in the labor/study choice of college students-as college becomes more affordable, students may substitute away from work and toward increased study. I use data from the National Postsecondary Student Aid Study (NPSAS) to exploit nonlinearity in the Pell Grant formula to estimate a regression kink and regression discontinuity designs. I find that conditional on receiving the minimum of $550, students reduce their labor supply by 0.4 hours per week, which translates to a 2.4 percent decrease in hours worked. Students who receive the average Pell Grant of $2,250 are 7.6 percentage points (or around 12 percent) less likely to work and, if working, supply 5.10 less hours per week, or around a 30.67 percent reduction. I find Pell Grants do increase academic achievement, implying that students substitute study time for work.
Subjects: 
Pell Grants
financial aid
regression kink
labor supply
JEL: 
I22
I23
J20
Document Type: 
Working Paper

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