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

Author

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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.

Suggested Citation

  • Steiner, Viktor & Wrohlich, Katharina, 2008. "Financial Student Aid and Enrollment into Higher Education: New Evidence from Germany," IZA Discussion Papers 3601, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3601
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    References listed on IDEAS

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    2. Peter Fredriksson, 1997. "Economic Incentives and the Demand for Higher Education," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 129-142, March.
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    5. Susan M. Dynarski, 2003. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," American Economic Review, American Economic Association, vol. 93(1), pages 279-288, March.
    6. 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.
    7. 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.
    8. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
    9. 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.
    10. 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.
    11. Dynarski, Susan, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(3), pages 629-662, September.
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    13. Hans J. Baumgartner & Viktor Steiner, 2006. "Does More Generous Student Aid Increase Enrolment Rates into Higher Education?: Evaluating the German Student Aid Reform of 2001," Discussion Papers of DIW Berlin 563, DIW Berlin, German Institute for Economic Research.
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    More about this item

    Keywords

    competing risk model; financial incentives; higher education;
    All these keywords.

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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