Monday, June 4, 2018

State merit-aid programs for college attendance have little impact on teen employment

This paper examines the impact of state merit-aid programs on the likelihood of high school-aged youths havng a job.  The labor force participation rate of teenagers has fallen substantially in recent decades, coinciding with the introduction of merit-aid programs. These programs reduce the price of attending an in-state public college or university for high-achieving students and have the potential to influence students’ allocation of time and effort between labor market activities, human capital development, and other forms of leisure.

The study examines the influence of these programs based on their generosity, both in the amount of aid provided to a recipient and the percent of students who are recipients of aid, and in their selectivity.

The results suggest that programs that are more selective reduce labor force participation, but are not a significant cause in the decline in teenage labor force participation in recent decades.

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