Analytical Studies Branch Research Paper Series

11F0019MIE

Volume 2007
Number 295

Why Are Youth from Lower-income Families Less Likely to Attend University? Evidence from Academic Abilities, Parental Influences, and Financial Constraints

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Why Are Youth from Lower-income Families Less Likely to Attend University? Evidence from Academic Abilities, Parental Influences, and Financial Constraints

by Marc Frenette

Executive summary

It is well known that economically disadvantaged students in Canada are less likely to pursue a university education than students from well-to-do families. Slightly more than one-half (50.2%) of youth from families in the top quartile of the income distribution attend university by age 19, compared to less than a third of youth from families in the bottom quartile (31.0%). Even youth from families in the third income quartile have a considerable advantage in attending university (43.4%) over youth from the bottom income quartile. Youth in the second quartile are only slightly more likely to attend university than youth in the bottom quartile.

These large gaps in university attendance have raised concerns among student groups, parents, policy analysts and education planners since they potentially have negative implications for the intergenerational transmission of earnings. Until recently, data limitations made it very challenging to understand the reasons behind the gaps. With the release of the third cycle of the Youth in Transition Survey, Cohort A, it is now possible to link university attendance of 19-year-old youth to a plethora of information on these youth when they were aged 15, including results from standardized tests, high-school marks, feeling control (or mastery) over one's life, self-esteem, parental income, parental education, parental expectations, peer influences, high school attended, and financial constraints, among others. The purpose of this study is to attempt to further understand the income gap in university participation with this new data source.

Compared to students from lower-income families, youth from well-to-do families generally perform better on standardized reading, mathematics and science tests; generally report higher marks; are far more likely to live with two birth parents and far less likely to live with only one parent; are more likely to have university-educated parents; are more likely to have parents who expect them to complete a university degree; and a larger proportion of their friends plan on furthering their education following high school. Moreover, students from well-to-do families are more likely to attend high schools that have a high propensity to produce university-bound students after accounting for student characteristics. Youth from higher-income families are also less likely to report financial reasons for not attending university.

Although most of the characteristics mentioned above are associated with university attendance, some factors matter more than others. Specifically, standardized test scores, high-school marks, parental education, parental expectations, high-school quality, and financial constraints tend to exert the strongest influence on the probability of going on to university.

The contribution of the differences in these factors in accounting for the gaps in university attendance across the income distribution is the main focus of the study. To this end, I apply a series of decompositions, which allocate the total gap in university participation into a portion that is accounted for by differences in observable characteristics and a portion that can not be accounted for by such differences. Furthermore, the component that can be accounted for by differences in characteristics can be further broken down by individual characteristic.

I find that 96% of the total gap in university attendance between youth from the top and bottom income quartiles can be accounted for by differences in observable characteristics. Differences in long-term factors such as standardized test scores in reading obtained at age 15, school marks reported at age 15, parental influences, and high-school quality account for 84% of the gap. In contrast, only 12% of the gap is related to financial constraints. Similar results hold across different income quartiles and when I use standardized test scores in mathematics and science. However, reading scores account for a larger proportion of the gap than other test scores.

Family income may pose different barriers to attending university. First, differences in academic performance across the income distribution may themselves be the result of differences in family income. Families with more financial resources may spend more money on books for children, take their children to museums, spend more on daycare in the early years, locate in neighbourhoods with better schools, etc. These actions may result in higher performance on standardized and scholastic tests, and thus, in a higher probability of attending university in the future. Second, upon deciding to attend university, students may be faced with another barrier that is related to their family's financial position: credit constraints. However, the evidence presented in this study casts some doubt on the widespread existence of credit constraints in Canada. Carneiro and Heckman (2002) also found very little evidence of credit constraints in the United States.

Despite the weak evidence on credit constraints, there are two important caveats to keep in mind. First, even if credit constraints do not matter a lot for the population of youth as whole, they may matter for certain groups of students in some instances. For example, Ontario students from middle-class backgrounds saw a large decline in their probability of pursuing a professional degree following the large and sudden tuition fee deregulation in these programs in Ontario universities (Frenette, 2005b). Another example is students who grew up living out of commuting distance from a university. The additional cost of attending a university away from the parental home is greater than $5,000 (Barr-Telford et al., 2003), which appears to reduce enrolment among students from lower-income families who must move away to attend (Frenette, 2004). Second, even if credit constraints could be 'ruled out,' it is important to note that this would be conditional on the existing financial aid system. Removing that system may (or may not) introduce credit constraints.

What the findings of the study suggest is that, given the weak evidence on the existence of widespread credit constraints, our focus should now shift towards trying to further understand why students from lower-income families tend to perform more poorly on standardized and scholastic tests than students from higher-income families.

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