DP8375 Investing in schooling in Chile: The role of information about financial aid for higher education
Recent research demonstrates that imperfect information about returns to education distorts schooling investments. Questions remain about what information is missing in different settings and for whom such information is most critical. We conducted a field experiment to investigate whether Grade 8 children increase effort after learning about financial aid for post-secondary schooling; whether responses are larger for high or low ability students; or when parents as well as children learn about financial aid. We randomly assigned over 6,000 Chilean 8th graders in poor urban schools to information treatment or control groups, with half of the treatment group watching an information DVD at school (Student group) and the other half receiving this DVD to watch at home (Family group). Combining survey with administrative data, we find substantial improvements in financial aid knowledge in treated schools and a 14% reduction in absenteeism, but no effects on 8th Grade scores or 9th Grade enrolment. Students with higher baseline grades appear to drive most of the significant responses. Surprisingly, although Family group parents report significantly better knowledge of DVD content, using both experimental variation and non-experimental methods we show that watching at home has no larger impact on child effort than watching at school, at least for students likely to choose to watch the DVD. These results suggest that while educational inputs can improve after learning more about the higher education production function, particularly for higher ability students, such information is insufficient for improving educational outcomes, even when parents are involved.