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Why are high ability individuals from poor backgrounds under-represented at university? /
We analyse data in which individuals from low socioeconomic status (SES) backgrounds have lower university participation rates than those from higher SES backgrounds. Our focus is on the role played by credit constraints in explaining these diÆerent participation rates. We propose a multistage model...
We analyse data in which individuals from low socioeconomic status (SES) backgrounds have lower university participation rates than those from higher SES backgrounds. Our focus is on the role played by credit constraints in explaining these diÆerent participation rates. We propose a multistage model of education where university participation is contingent on ability to pay and high school academic performance, which depends on family SES and innate student ability. We Ønd no evidence that credit constraints deter high achieving students from attending university in Australia, a country with an income contingent loan scheme for higher education tuition fees. We do, however, Ønd that how students convert their earlier school performance into the scores on which university entrance is based is contingent on their SES. That is, for students of similar ability, those from higher SES backgrounds are more likely to obtain university entrance scores and achieve higher scores if they do. Hence, policy interventions that rectify the credit constraint problem that faces individuals at the time they make university entrance decisions are not su±cient to equalize university participation across social groups.
