Gone with the Windfall : How do Housing Allowances Affect Student Co-residence ?

Drawing on five cross-sections of the French Housing Survey, this paper examines theeffects on co-residence with their parents of the extension of housing allowances tostudents that took place between 1991 and 1993. Two effects are found. First housingallowances provide an increased opportunity for students to move out of their parents'home. Second, the subsidy affects not just the decision to move out, but location andhousing quality choices. Finally we suggest a model to identify how much of theallowance came as a windfall gain to parents. Defining the windfall gain as being thesubsidies distributed to students who can study locally and whose choice would havebeen to live independently without the subsidy, we find that as much as half of theallowance came as a windfall gain to stude nts and their parents.