Evaluating the effects of university grants by using regression discontinuity designs

Abstract

The paper evaluates the effects of Italian university grants on student dropout. Eligible applicants receive a grant if their family economic indicator is below a specified threshold, so the grant assignment rule appeals to a regression discontinuity design. After a brief introduction to regression discontinuity designs, the particular setting that is considered in the paper is formalized. Difference-in-difference type assumptions are introduced to identify and estimate the effect away from the threshold. Empirical results show that, at the threshold, the grant is an effective tool to prevent students from low income families from dropping out of higher education. However, there is some evidence that the effect of the grant becomes smaller and not significant for poorer students who are further from the threshold. © 2012 Royal Statistical Society.