TY  - RPRT
        AU  - Kofoed, Michael S.
        TI  - Pell Grants and Labor Supply: Evidence from a Regression Kink
        PY  - 2022/Feb/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 15061
        UR  - https://www.iza.org/publications/dp15061
        AB  - 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.

        KW  - Pell Grants
KW  - financial aid
KW  - regression kink
KW  - labor supply
        ER  -