We study the ex-ante motivational effect of a nationwide merit and need-based scholarship in Colombia. Ser Pilo Paga (SPP) is a program that grants full scholarships at top-quality universities for 10,000 low-income students per cohort. After its introduction in 2014, SPP completely closed the socioeconomic enrollment gap for high-performing students in top universities. Using administrative data on the universe of high-school seniors, we explore whether this unprecedented change in opportunities generated an ex-ante motivational effect on eligible students’ performance in the 2015 national high school exit exam. Our results from a Difference in Difference model and a Regression Discontinuity Design indicate that the need-based eligibility to the scholarship had a substantial effect on test scores at the top of the distribution, starting around the 70th percentile. For example, at the 90th percentile of the test score distribution, eligibility to the scholarship reduced the socioeconomic achievement gap by 17 percent. We also find that the motivational effect is concentrated in schools where at least one student received the scholarship in 2014, and that university enrollment rates even increased for eligible students who obtained a test score just below the requirement to obtain the scholarship. Our results highlight the way in which the lack of opportunities for social mobility discourages human capital accumulation by low income students, thus contributing to the persistence of poverty and inequality.
