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Credit Constraints in Higher Education Attendance: Longitudinal Evidence from Ethiopia
(African Economic Research Consortium, 2024-08-22) Eigbiremolen, Godstime O.; Orji, Anthony
This paper examines the household wealth–higher education attendance relationship and the evidence on credit constraints in post-secondary schooling. Using unique longitudinal data that link household wealth and measures of cognitive ability age 12 years to higher education attendance at age 19–22 years, we differentiated short-term credit constraints from long-term credit constraints and directly tested the relative importance of short and long-term credit constraints in schooling decision. We found that both short-term and long-term credit constraints determine the household wealth–higher education attendance relationship. Therefore, we recommend complementing short-term policies like financial aid with long-term interventions that empower households to continue to invest in human capital development over the child’s life cycle, which will crystalize in higher cognitive ability and readiness for higher education.