Applied Economics Lunch Seminar

Du 25/02/2020 de 12:30 à 13:30

Salle R1-09, Campus Jourdan, 48 boulevard Jourdan, 75014 Paris

GROBON Sebastien (Dares, INED)

Do public scholarships crowd out parental transfers? Evidence from France

We investigate the extent to which means-tested scholarships awarded to higher education students in France crowd out parental financial support, explore the implications of this estimation when testing the parental altruism model, and analyze the incidence of targeted support for youth. Our results provide some of the first causal evidence on the important effect that public transfers have on private transfers in a developed country. We focus on the intensive margin using a sample of 694 scholarship recipients aged 18 to 24, and our instrumental variable estimation exploits the non-linear schedule of the scholarship amount. To estimate a reliable private transfer function and to provide a comprehensive measurement of parental transfers, we use parental fiscal data complemented by a survey of young adults (2014). A substantial part of a student scholarship benefits parents: for each additional euro of scholarship, the private transfer amount is reduced by 0.50 to 0.65 euros. This incomplete crowding out supports the “impure altruism” hypothesis (Andreoni, 1989), while complete crowding out seems to be verified only for separated parents and the youngest children. As parents are secondary beneficiaries of the policy, our results confirm the relevance of considering parental resources in defining policies for young adults before the age of 20–21. As young adults gain more autonomy after these ages, the crowding-out effects seem to diminish and thus limit the possibility of a windfall effect for parents.