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

65 Pages Posted: 27 Feb 2017

See all articles by Yuval Arbel

Yuval Arbel

Technion-Israel Institute of Technology - Faculty of Architecture and Town Planning

Ronen Bar-El

Open University of Israel

Yossef Tobol

The Jerusalem College of Technology; The Carmel Academic Center

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.

Keywords: higher education, human capital formation, income inequality, socioeconomic background, subsidies

JEL Classification: C83, D31, D62, I22, I28, R23

Suggested Citation

Arbel, Yuval and Bar-El, Ronen and Tobol, Yossef, Equal Opportunity Through Higher Education: Theory and Evidence on Privilege and Ability. IZA Discussion Paper No. 10564, Available at SSRN: https://ssrn.com/abstract=2923649 or http://dx.doi.org/10.2139/ssrn.2923649

Yuval Arbel (Contact Author)

Technion-Israel Institute of Technology - Faculty of Architecture and Town Planning ( email )

Technion City
Haifa 32000
Israel

Ronen Bar-El

Open University of Israel ( email )

Yossef Tobol

The Jerusalem College of Technology ( email )

Jerusalem
Israel

HOME PAGE: http://www.jct.ac.il/he/tobol

The Carmel Academic Center ( email )

Haifa
Israel

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