Education Subsidies And School Drop-Out Rates Literature Review Example

This is a paper written by Lorraine Dearden, Carl Emmerson, Christine Frayne and Costas Meghir, and it assesses the effect of grants offered to 16-18 year old students on reduction of school dropouts. The impact varies with the amount of grant offered. Those who receive full payment tend to have high participation. However, the policy’s impact is majorly affected by credit constraints rather than the amount of grant offered.
Most developing and developed states have introduced financial grants instead of increasing school leaving age reduce dropout cases. In an effort to examine this, the authors looked at several works. One of them is the Heckler, Lochner and Taber (1999), who examined the equilibrium effect of having different levels of grants. He concluded that monetary incentives played a major role in the way individuals chose their tuition levels.
Dynarski another author examined how incentives influenced college attendance and completion in US, in his work Dynarski (2003). He found that the direct impact was very little as he hardly got evidence that school participation existed due to financial grants.
These researchers majorly depended on PROGRESA experiment in Mexico, (Schultz (2004) that studied on significant impacts primarily for 12 -14 year old students. The PROGRESA data was used by Todd and Wolpin (2003), and they came in a conclusion that wage can actually can be an opportunity cost to academics. Attanasio, Meghir and Santiago (2005) rejected this and argued that reduction in wages does not increase school attendance. Therefore, schooling subsidy has a major importance in school attendance and thus it is major evidence.
In their paper they examine the Educational Maintenance Allowance and its impact on school completion. EMA is a programme in the UK that subsidizes children to continue learning to years after the statutory age. They came in a conclusion that the introduction of EMA has significantly increased school completion.