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Fostering the Emancipation of Young People: Evidence from a Spanish Rental Subsidy

Author Info

  • Aparicio Fenoll, Ainhoa

    ()

    (Collegio Carlo Alberto)

  • Oppedisano, Veruska

    ()

    (University of Westminster)

Abstract

In Southern Europe youngsters leave the parental home significantly later than in Northern Europe and United States. In this paper, we study the effect of a monthly cash subsidy on young adults' emancipation, family formation, and fertility. The subsidy, introduced in Spain in 2008, is conditional on young adults renting accommodation, and it amounts to almost 20 percent of the average youngsters' wage. Our identification strategy exploits the subsidy eligibility age threshold to assess the causal impact of the cash transfer. Difference-in-Differences and Regression Discontinuity estimates show that the policy increases emancipation rates by 0.9-2.3 percentage points, couple cohabitation by 1.2-2.4 percentage points, and the probability of having children by 4.8-8.1 percentage points for 22 year-olds compared to 21 year-olds. The effect is larger among young adults earning lower incomes and living in high rental price areas. This is consistent with the hypothesis that youngsters delay emancipation and family formation because they are budget constrained.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6651.

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Length: 34 pages
Date of creation: Jun 2012
Date of revision:
Publication status: published in: The B.E. Journal of Economic Analysis and Policy: Contributions, 2015, vol. 15, issue 1
Handle: RePEc:iza:izadps:dp6651
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Keywords: rental subsidy; conditional cash transfer; youth emancipation; family formation; fertility;

Find related papers by JEL classification:

  • J1 - Labor and Demographic Economics - - Demographic Economics
  • H2 - Public Economics - - Taxation, Subsidies, and Revenue
  • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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  1. Sascha Becker & Samuel Bentolila & Ana Fernandes & Andrea Ichino, 2010. "Youth emancipation and perceived job insecurity of parents and children," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(3), pages 1047-1071, June.
  2. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
  3. Nuno Martins & Ernesto Villanueva, 2009. "Does High Cost of Mortgage Debt Explain Why Young Adults Live with Their Parents?," Journal of the European Economic Association, MIT Press, vol. 7(5), pages 974-1010, 09.
  4. Giannelli, Gianna Claudia & Monfardini, Chiara, 2000. "Joint Decisions on Household Membership and Human Capital Accumulation of Youths - The role of expected earnings and local markets," IZA Discussion Papers 191, Institute for the Study of Labor (IZA).
  5. Maria Concetta Chiuri & Daniela Del Boca, 2009. "Home-leaving Decision of Daughters and Sons," Carlo Alberto Notebooks 136, Collegio Carlo Alberto.
  6. Mario García-Ferreira & Ernesto Villanueva, 2007. "Employment risk and household formation: evidence from differences in firing costs," Working Papers 0737, Banco de España;Working Papers Homepage.
  7. Paola Giuliano, 2007. "Living Arrangements in Western Europe: Does Cultural Origin Matter?," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 927-952, 09.
  8. Guido Imbens & Thomas Lemieux, 2007. "Regression Discontinuity Designs: A Guide to Practice," NBER Technical Working Papers 0337, National Bureau of Economic Research, Inc.
  9. Lee, David S. & Card, David, 2008. "Regression discontinuity inference with specification error," Journal of Econometrics, Elsevier, vol. 142(2), pages 655-674, February.
  10. Ermisch, John, 1999. "Prices, Parents, and Young People's Household Formation," Journal of Urban Economics, Elsevier, vol. 45(1), pages 47-71, January.
  11. Lee, David S., 2008. "Randomized experiments from non-random selection in U.S. House elections," Journal of Econometrics, Elsevier, vol. 142(2), pages 675-697, February.
  12. Wilbert van der Klaauw, 2008. "Regression-Discontinuity Analysis: A Survey of Recent Developments in Economics," LABOUR, CEIS, vol. 22(2), pages 219-245, 06.
  13. Susin, Scott, 2002. "Rent vouchers and the price of low-income housing," Journal of Public Economics, Elsevier, vol. 83(1), pages 109-152, January.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. La emancipación con recortes rápidos y reformas a medio gas
    by Florentino Felgueroso in Nada Es Gratis on 2012-07-26 23:56:04
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Cited by:

  1. Arnstein Aassve & Elena Cottini & Agnese Vitali, 2013. "Youth Vulnerability in Europe during the Great Recession," Working Papers 057, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
  2. Aparicio Fenoll, Ainhoa & Oppedisano, Veruska, 2014. "Should I Stay or Should I Go? Sibling Effects in Household Formation," IZA Discussion Papers 8713, Institute for the Study of Labor (IZA).

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