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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.

Suggested Citation

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

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    1. 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.
    2. 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.
    3. Fredriksson, Peter, 1997. " Economic Incentives and the Demand for Higher Education," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 129-142, March.
    4. 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.
    5. 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.
    6. Katharine G. Abraham & Melissa A. Clark, 2006. "Financial Aid and Students’ College Decisions: Evidence from the District of Columbia Tuition Assistance Grant Program," Journal of Human Resources, University of Wisconsin Press, vol. 41(3).
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
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    Cited by:

    1. Frauke H. Peter & Vaishali Zambre, 2014. "Wer studiert, ist informiert?: Studienentscheidungen und Informationsdefizite," DIW Roundup: Politik im Fokus 35, DIW Berlin, German Institute for Economic Research.
    2. 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.
    3. Görlitz, Katja & Gravert, Christina, 2015. "The Effects of a High School Curriculum Reform on University Enrollment and the Choice of College Major," IZA Discussion Papers 8983, Institute for the Study of Labor (IZA).
    4. Stefanie P. Herber & Michael Kalinowski, 2016. "Non-Take-Up of Student Financial Aid: A Microsimulation for Germany," SOEPpapers on Multidisciplinary Panel Data Research 844, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Glocker, Daniela & Steiner, Viktor, 2011. "Returns to Education across Europe," CEPR Discussion Papers 8568, C.E.P.R. Discussion Papers.
    6. Daniel Kemptner & Songül Tolan, 2016. "The Role of Time Preferences in Educational Decision Making," Discussion Papers of DIW Berlin 1628, DIW Berlin, German Institute for Economic Research.
    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. repec:eee:ecoedu:v:60:y:2017:i:c:p:125-141 is not listed on IDEAS
    9. Regina Riphahn & Florian Schieferdecker, 2012. "The transition to tertiary education and parental background over time," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 635-675, January.
    10. 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.
    11. Herber, Stefanie P. & Kalinowski, Michael, 2016. "Non-take-up of student financial aid: A microsimulation for Germany," BERG Working Paper Series 109, Bamberg University, Bamberg Economic Research Group.
    12. Frank Fossen & Daniela Glocker, 2011. "Expected future earnings, taxation, and university enrollment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(6), pages 688-723, December.
    13. 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).
    14. Herber, Stefanie P. & Kalinowski, Michael, 2016. "Non-take-up of Student Financial Aid: A Microsimulation for Germany," Annual Conference 2016 (Augsburg): Demographic Change 145727, Verein für Socialpolitik / German Economic Association.
    15. Vergolini, Loris & Zanini, Nadir, 2015. "Away, but not too far from home. The effects of financial aid on university enrolment decisions," Economics of Education Review, Elsevier, vol. 49(C), pages 91-109.
    16. 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.
    17. Peter, Frauke H. & Zambre, Vaishali, 2017. "Intended college enrollment and educational inequality: Do students lack information?," Economics of Education Review, Elsevier, vol. 60(C), pages 125-141.
    18. 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).
    19. Jan Marcus & Vaishali Zambre, 2016. "The Effect of Increasing Education Efficiency on University Enrollment: Evidence from Administrative Data and an Unusual Schooling Reform in Germany," Discussion Papers of DIW Berlin 1613, DIW Berlin, German Institute for Economic Research.
    20. Biewen, Martin & Tapalaga, Madalina, 2017. "Life-cycle educational choices in a system with early tracking and ‘second chance’ options," Economics of Education Review, Elsevier, vol. 56(C), pages 80-94.

    More about this item

    Keywords

    competing risk model; financial incentives; higher education;

    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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