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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

    ()

    (London Metropolitan University)

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:
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. Becker, Sascha O. & Bentolila, Samuel & Fernandes, Ana & Ichino, Andrea, 2005. "Youth Emancipation and Perceived Job Insecurity of Parents and Children," CEPR Discussion Papers 5338, C.E.P.R. Discussion Papers.
  2. Chiuri, Maria Concetta & Del Boca, Daniela, 2010. "Home-Leaving Decisions of Daughters and Sons," IZA Discussion Papers 4867, Institute for the Study of Labor (IZA).
  3. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs in Economics," NBER Working Papers 14723, National Bureau of Economic Research, Inc.
  4. Imbens, Guido W. & Lemieux, Thomas, 2008. "Regression discontinuity designs: A guide to practice," Journal of Econometrics, Elsevier, vol. 142(2), pages 615-635, February.
  5. Mario García-Ferreira & Ernesto Villanueva, 2007. "Employment risk and household formation: evidence from differences in firing costs," Banco de Espa�a Working Papers 0737, Banco de Espa�a.
  6. Susin, Scott, 2002. "Rent vouchers and the price of low-income housing," Journal of Public Economics, Elsevier, vol. 83(1), pages 109-152, January.
  7. Paola Giuliano, 2005. "Living Arrangements in Western Europe: Does Cultural Origin Matter?," 2005 Meeting Papers 189, Society for Economic Dynamics.
  8. Ermisch, John, 1999. "Prices, Parents, and Young People's Household Formation," Journal of Urban Economics, Elsevier, vol. 45(1), pages 47-71, January.
  9. 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.
  10. Gianna Claudia Giannelli & Chiara Monfardini, 2001. "JOINT DECISIONS ON HOUSEHOLD MEMBERSHIP AND HUMAN CAPITAL ACCUMULATION OF YOUTHS The role of expected earnings and local markets," CHILD Working Papers wp02_01, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  11. Lee, David S. & Card, David, 2008. "Regression discontinuity inference with specification error," Journal of Econometrics, Elsevier, vol. 142(2), pages 655-674, 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. 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.
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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.

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