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

Ainoa Aparicio and Veruska Oppedisano (v.oppedisano@ucl.ac.uk)

No 6651, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: youth emancipation; conditional cash transfer; family formation; rental subsidy; fertility (search for similar items in EconPapers)
JEL-codes: H2 I3 J1 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2012-06
New Economics Papers: this item is included in nep-dem and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published as: 'Fostering Household Formation: Evidence from a Spanish Rental Subsidy' in: The B.E. Journal of Economic Analysis and Policy: Contributions, 2015, 15 (1), 53 - 85

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