Dreaming of a Brighter Future? The Impact of Economic Vulnerability on University Aspirations

We investigate how economic vulnerability (measured in terms of poverty and economic insecurity) impacts the educational aspirations of youth, age 12-15, within an inequality of opportunity framework. Using the Canadian National Longitudinal Survey of Children and Youth, we find that poverty is associated with reduced university aspirations from the perspective of the youth (8-9 percentage points) and their mother (11-13 percentage points). Further, poverty incidence matters more than depth. Using the dissimilarity index, circumstances contribute to about 20-25 percent of the inequality in educational aspirations, and a Shapley decomposition of these circumstances suggests that, of this observed inequality, 10-15 percent is due to poverty. Interestingly, economic insecurity is not associated with educational aspirations, and this result persists regardless of how we measure insecurity. This may be due to the fact that, over time, poverty is more likely to persist than economic insecurity. Consequently, while the latter may be seen as a temporary shock, the former may create a feeling of hopelessness, thereby reducing aspirations. Controls for academic effort, including standardized test scores, daily reading, and getting good grades do not impact these findings. Results therefore suggest that alleviating child poverty may improve educational aspirations at a critical time in a youth's life. JEL Codes: I21, I23, I24, I32, D63