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Financial Student Aid and Enrollment into Higher Education: New Evidence from Germany

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  • Steiner, Viktor

    ()
    (Free University of Berlin)

  • Wrohlich, Katharina

    ()
    (DIW Berlin)

Abstract

We estimate the elasticity of enrollment into higher education with respect to the amount of means tested student aid (BAfoeG) provided by the federal government using the German Socioeconomic Panel (SOEP). Potential student aid is derived on the basis of a detailed tax-benefit microsimulation model. Since potential student aid is a highly non-linear and discontinuous function of parental income, the effect of BAfoeG on students’ enrollment decisions can be identified separately from parental income and other family background variables. We find a small but significant positive elasticity similar in size to those reported in previous studies for the United States and other countries.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3601.

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Length: 28 pages
Date of creation: Jul 2008
Date of revision:
Publication status: published online in: Scandinavian Journal of Economics, 2011, [Online First]
Handle: RePEc:iza:izadps:dp3601

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Keywords: financial incentives; competing risk model; higher education;

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References

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  1. Fredriksson, Peter, 1997. " Economic Incentives and the Demand for Higher Education," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 129-42, March.
  2. 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.
  3. Dynarski, Susan, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 629-62, September.
  4. Helena Skyt Nielsen & Torben Sørensen & Christopher Taber, 2010. "Estimating the Effect of Student Aid on College Enrollment: Evidence from a Government Grant Policy Reform," NBER Chapters, in: Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), pages 185-215 National Bureau of Economic Research, Inc.
  5. Lauer, Charlotte, 2003. "Family background, cohort and education: A French-German comparison based on a multivariate ordered probit model of educational attainment," Labour Economics, Elsevier, vol. 10(2), pages 231-251, April.
  6. Susan Dynarski, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," NBER Working Papers 7756, National Bureau of Economic Research, Inc.
  7. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP): Scope, Evolution and Enhancements," SOEPpapers on Multidisciplinary Panel Data Research 1, DIW Berlin, The German Socio-Economic Panel (SOEP).
  8. Katharine Abraham & Melissa A. Clark, 2003. "Financial Aid and Students' College Decisions: Evidence from the District of Columbia's Tuition Assistance Grant Program," NBER Working Papers 10112, National Bureau of Economic Research, Inc.
  9. Dynarski, Susan, 2001. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," Working Paper Series rwp01-034, Harvard University, John F. Kennedy School of Government.
  10. David M. Linsenmeier & Harvey S. Rosen & Cecilia Elena Rouse, 2006. "Financial Aid Packages and College Enrollment Decisions: An Econometric Case Study," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 126-145, February.
  11. Thomas J. Kane, 2003. "A Quasi-Experimental Estimate of the Impact of Financial Aid on College-Going," NBER Working Papers 9703, National Bureau of Economic Research, Inc.
  12. Susan Dynarski, 2002. "The Behavioral and Distributional Implications of Aid for College," American Economic Review, American Economic Association, vol. 92(2), pages 279-285, May.
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Cited by:
  1. Loris Vergolini & Nadir Zanini, 2012. "How does aid matter? The effect of financial aid on university enrolment decisions," Working Papers 2012/7, Institut d'Economia de Barcelona (IEB).
  2. Spiess, C. Katharina & Wrohlich, Katharina, 2010. "Does distance determine who attends a university in Germany?," Economics of Education Review, Elsevier, vol. 29(3), pages 470-479, June.
  3. Hübner, Malte, 2012. "Do tuition fees affect enrollment behavior? Evidence from a ‘natural experiment’ in Germany," Economics of Education Review, Elsevier, vol. 31(6), pages 949-960.
  4. Regina Riphahn & Florian Schieferdecker, 2012. "The transition to tertiary education and parental background over time," Journal of Population Economics, Springer, vol. 25(2), pages 635-675, January.
  5. Benedikt Siegler, 2012. "The Effect of University Openings on Local Human Capital Formation: Difference-in-Differences Evidence from Germany," Working Papers 124, Bavarian Graduate Program in Economics (BGPE).
  6. Frank Fossen & Daniela Glocker, 2011. "Expected future earnings, taxation, and university enrollment," International Tax and Public Finance, Springer, vol. 18(6), pages 688-723, December.
  7. Frank M. Fossen & Daniela Glocker, 2009. "Expected Future Earnings, Taxation, and University Enrollment: A Microeconometric Model with Uncertainty," SOEPpapers on Multidisciplinary Panel Data Research 241, DIW Berlin, The German Socio-Economic Panel (SOEP).
  8. Glocker, Daniela & Steiner, Viktor, 2011. "Returns to Education across Europe," CEPR Discussion Papers 8568, C.E.P.R. Discussion Papers.
  9. Glocker, Daniela & Steiner, Viktor, 2011. "Returns to education across Europe: A comparative analysis for selected EU countries," Discussion Papers 2011/15, Free University Berlin, School of Business & Economics.

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