Influence of Family Background on Tertiary Education Choices (Levels and Quality): Evidence from Tuition Policy Changes

The current study concentrates on the influence of family background, labor-market conditions and existing tuition policies on tertiary-education choices. We explore the natural experiment of changes in tuition policies happened during 1995-2006 years in the Russian Federation (passage from state-subsidized education to mixed forms of tertiary education: on a state-subsidized and full-tuition basis). We construct and estimate the model to analyze the different influences of family educational background, family income, and labor-market conditions on college attainment within different educational systems. First, we allow family income (together with family background) to affect students’ abilities at the moment of college entrance. Second, we allow for heterogeneity in the quality of college education. Third, we introduce an admission selection performed by colleges, which is strictly determined by applicants’ abilities and varies depending on the educational type (state-subsidized or fulltuition) and college quality (low and high quality institutions). The particular structure of the Russian tertiary education system (the possibility to obtain a college degree on a statesubsidized and full-tuition basis) allows us to analyze the determinants of additional financial investments into children tertiary education conditional on their abilities. The results suggest, that educational reforms in Russia during 1995-2006 years have significantly increased the importance of family income in determining college enrollment, especially on a full-tuition basis. Moreover, family income, compared to parents’ educational background, determines to a larger extent the sorting of students among colleges with different quality of education.