We study the optimal design of student financial aid as a function of parental income. We derive optimal financial aid … formulas in a general model. For a simple model version, we derive mild conditions on primitives under which poorer students …, labor supply in college, and uncertain returns. Optimal financial aid is strongly declining in parental income even without …

, even though displacement episodes early in children’s lives have the largest impacts on household income (because they … persist for many years), displacement episodes occurring in the children’s teenage years have the largest effects on human … capital accumulation. We show that most of the effects operate through the intensive margin of schooling, and that children …

perceptions of intergenerational mobility change along the income distribution. Empirically, we conduct a survey experiment in … Austria and show that the average treatment effect of information on perceptions is mostly driven by higher income individuals … while low-income respondents hardly react. We replicate this result for the United States and Germany using data from two …