Equality of opportunity and human capital accumulation: Motivational effect of a nationwide scholarship in Colombia

Abstract

We study the ex ante motivational effect of a nationwide merit and need-based scholarship in Colombia, which granted full scholarships to low-income students at high-quality universities. Specifically, we analyze how the opportunity to receive the scholarship, influenced the performance of low-income students in the national high-school exit and 9th grade exams, and their university enrollment rates. Following a differences-in-discontinuity design, we find that the opportunity to receive the scholarship significantly increased test scores at the national high school exit exam at the top of the distribution. At the 90th percentile of the distribution, eligibility for the scholarship reduced the socioeconomic achievement gap by 16 percent. We also document an increase in the post-secondary enrollment of low-income students at the top of their score distribution, even for the non-recipients of the scholarship. Finally, we estimate a positive effect on the test scores of younger 9th grade students, affecting a broader range of the distribution. Our results highlight how opportunities for social mobility encourage human capital accumulation by low-income students, thus contributing to breaking the persistence of poverty and inequality.