Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments January 24, 2021 erstellt
Description:
Educational inequality undermines the pivotal role of education in increasing the ability of the poor to move up the income ladder. This paper investigates educational inequality that arises from low-income students' lack of monetary resources that higher-income students invest in college-admissions-test preparations. We show educational inequality increases in the size of higher-income students and in the selectivity of college admissions. The intuition is that a larger size of higher-income students makes the college admission more selective and thus the college education more rewarding. All students study harder. However, because higher-income students' efforts are more effective, due to their monetary investments in test preparation, they respond more aggressively. Therefore, the probability of admission of a higher-income student becomes even higher than that of a low-income student. In the context of developing markets, we study implications of a reservation policy that aims to reduce inequality by transferring seats to students of certain identifiable characteristics that are imperfectly informative of students' lack of monetary resources. We show such a transfer, if small, can enhance student welfare. However, a large transfer may reduce student welfare