Examining the Impact of a Highly Targeted State Administered Merit Aid Program on Brain Drain: Evidence from a Regression Discontinuity Analysis of Missouri's Bright Flight Program

The adoption of state-funded merit-based aid programs has become increasingly popular among policy-makers, particularly in the southeastern part of the United States. One of the primary rationales of state-funded merit-based aid is to provide scholarships to the best and brightest students as a means to retain high quality human capital in the state's labor market. Previous literature largely examines the link between state-funded merit-based aid and instate college enrollment, but it has not extensively examined the link between state-administered merit aid and subsequent instate labor market participation. In this study, we use statewide administrative datasets to estimate the effects of Missouri's Bright Flight Scholarship program, a highly targeted state administered merit aid program, on future instate employment. Using a regression discontinuity approach on the intent to treat, we find that having the opportunity to participate in the Bright Flight Scholarship program has a positive impact on the likelihood of working in the state 8 years after high school graduation. Overall, this study provides evidence that highly targeted state-funded merit-based financial aid programs may have a positive impact on reducing state brain drain.