Journal of Political Economy · 2026 · Juliana Londoño-Vélez、Catherine Rodríguez、Fabio Sánchez、Luis Álvarez-Arango
Abstract
We study the impact of financial aid on upward mobility. We estimate the causal impacts of a Colombian policy targeting high-achieving, low-socioeconomic-status students on later-life educational and labor market outcomes. Using regression discontinuity design, difference-in-differences, and population-wide administrative microdata, we find that the policy boosted attendance and completion at high-value-added colleges, particularly in STEM fields. Improved college quality led to greater skill development. Nine years later, recipients earn 18 log points more and are more likely to reach the top 1%. The policy narrowed socioeconomic gaps in college quality, attainment, skill development, earnings, and returns to ability, improving equity and efficiency.