Evaluating the effects of university grants using regression discontinuity designs

The paper evaluates the effects of Italian university grants on student dropout. Applicants meeting some eligibility criteria receive a grant if their family economic indicator is below a threshold, so that the grant assignment rule defines a regression discontinuity design (RDD). After a brief introduction of RDDs, the particular RDD setting considered in the paper is formalized. Difference-in-difference type assumptions are introduced to identify and estimate the effect away from the threshold. Empirical results show that, at the threshold, the grant is an effective tool to prevent students from low income families from dropping out of higher education. However, there is some evidence that the impact of the grant becomes smaller and not significant for poorer students.