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The effect of the supplementary grant on parental contribution in the Netherlands

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  • Roel van Elk

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  • Michelle Ebens
  • Dinand Webbink
  • Adam Booij
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    Abstract

    Recently, there has been considerable debate about a reform of the Dutch system of student support, in which grants will be (partly) replaced by loans. The discussion focuses on the effects on student enrollment decisions. Surprisingly, no study has yet analysed the effect of receiving a grant on parental contribution. Parents may decrease their contribution when their child receives a grant, in which case subsidies meant for the students unintentionally end up with the parents. Understanding the corresponding parental behaviour will contribute to a more in-depth discussion on the financial aid system. This paper focuses on the effect of the supplementary grant on the parental contribution in the Netherlands. The supplementary grant is meant to support students from disadvantaged families. Parents from students with the supplementary grant have less disposable income, which probably implies a lower contribution. Our identification strategy separates this income effect from the effect due to the payments of the supplementary grant. The results suggest substantial substitution. Each additional euro spent on supplementary grant reduces the parental contribution with approximately 20-60 cents. A broad range of sensitivity analyses support our main estimation results. Nevertheless, some caution in interpreting the results is needed because of data limitations.

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    Bibliographic Info

    Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 187.

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    Date of creation: Aug 2011
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    Handle: RePEc:cpb:discus:187

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    1. Michèle Belot & Erik Canton & Dinand Webbink, 2007. "Does reducing student support affect scholastic performance? Evidence from a Dutch reform," Empirical Economics, Springer, vol. 32(2), pages 261-275, May.
    2. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 20(4), pages 733-783, October.
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    7. Wilbert van der Klaauw, 2008. "Regression-Discontinuity Analysis: A Survey of Recent Developments in Economics," LABOUR, CEIS, CEIS, vol. 22(2), pages 219-245, 06.
    8. Lee, David S., 2008. "Randomized experiments from non-random selection in U.S. House elections," Journal of Econometrics, Elsevier, vol. 142(2), pages 675-697, February.
    9. Susan M. Dynarski, 1999. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," NBER Working Papers 7422, National Bureau of Economic Research, Inc.
    10. Wilbert van der Klaauw, 2002. "Estimating the Effect of Financial Aid Offers on College Enrollment: A Regression-Discontinuity Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1249-1287, November.
    11. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, Econometric Society, vol. 69(1), pages 201-09, January.
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