Inequality in Parental Transfers and Optimal Need-Based Financial Aid

Youngmin Park

Staff Working Papers from Bank of Canada

Abstract: This paper studies optimal need-based financial aid when parental transfers—unobserved by policymakers—vary across and within families of similar means. Using data on U.S. college students, I document substantial inequality in parental transfers, especially among wealthier families. I then analyze how this affects aid design aimed at reducing inefficiencies from borrowing constraints and the aid itself. Greater inequality in parental transfers among wealthier families weakens the progressivity of the aid, providing more relief to students with low transfers despite their affluent background. Moreover, aid shifts toward two-year colleges, which students with limited parental help are more likely to attend.

Keywords: Fiscal Policy; Potential output; Productivity (search for similar items in EconPapers)
JEL-codes: D14 D61 D64 D82 I22 J24 (search for similar items in EconPapers)
Pages: 97 pages
Date: 2019-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://doi.org/10.34989/swp-2019-7 Abstract (text/html)
https://www.bankofcanada.ca/wp-content/uploads/2019/02/swp2019-7.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:19-7

Access Statistics for this paper

More papers in Staff Working Papers from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada. Contact information at EDIRC.
Bibliographic data for series maintained by ().