Advanced Search
MyIDEAS: Login to save this paper or follow this series

The impact of grants, tax credit and education savings account on parental contributions to college expenses and the educational attainment of children

Contents:

Author Info

  • Morris, Michael D.

    (University of New Orleans)

Registered author(s):

    Abstract

    This paper presents a multi-period, dynamic programming model of household choices on savings, consumption, having children and helping to fund children's education. Data from the National Longitudinal Survey young women cohort are used to estimate the parameters of the model. The full structural model is estimated using a simulated maximum likelihood procedure utilizing the dynamic programming model solution to create simulated data samples from which nonparametric kernel estimators are used to construct the densities in the likelihood. The estimated model is able to match the general trends in the NLS data, particularly as related to the interaction between children, savings and spending on education. The life-cycle paths of these choices suggest that parents do save to help make sizeable transfers to their children, and that making such choices endogenous is important. Furthermore, the parameter estimates indicate that the amount that parents choose to contribute to a child’s education has a strong impact on the probability that a child attains a college degree, as does the level of education of the parents. Using the estimated model, policy experiments are performed to look at the impact of additional government grants for college education, tax credits for college spending and the creation of tax-free education savings accounts on parental savings, contributions toward education, and the education attainment of children. While all of the policies increase net contributions to children and increase the probability that a child attains a college degree, the grants and education savings accounts are found to be the most effective. In addition, both policies are actually found to have a greater impact on children with less educated parents.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://louisdl.louislibraries.org/cgi-bin/showfile.exe?CISOROOT=/EFW&CISOPTR=5
    Our checks indicate that this address may not be valid because: 404 Page not found.. If this is indeed the case, please notify (Janet Murphy Crane)
    Download Restriction: no

    Bibliographic Info

    Paper provided by University of New Orleans, Department of Economics and Finance in its series Working Papers with number 2003-07.

    as in new window
    Length: 64 pages
    Date of creation: 12 Feb 2003
    Date of revision:
    Handle: RePEc:uno:wpaper:2003-07

    Contact details of provider:
    Postal: New Orleans, Louisiana 70148
    Phone: (504) 280-6485
    Email:
    Web page: http://www.uno.edu/~coba/econ/index.html
    More information through EDIRC

    Related research

    Keywords: Grants; Tax credits; Education savings accounts; College expenses;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:uno:wpaper:2003-07. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Janet Murphy Crane).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.