Do grants improve the outcomes of university students in a challenging context? Evidence from a matching approach

In this work, we investigate whether grants improve the academic outcomes of students from socio-economically disadvantaged families and thereby reduce inequalities of educational opportunities. We focus on Italy, which is characterized by high dropout rates, prolonged duration of higher education studies and considerable social inequalities in educational outcomes. To estimate the effect of grants, we follow a counterfactual approach, relying on a reweighting matching procedure. First, we apply coarsened exact matching to identify the region of common support. Second, we weight the observation using the entropy balancing method. We use a nationally representative survey, which collects data on students who graduated from upper secondary school in 2004 and 2007. We find that grants reduce dropout and increase timely graduation, with larger effects among males and students in Central-Southern Italy, who are more at risk of withdrawal from university.