Financial Student Aid and Enrollment into Higher Education: New Evidence from Germany

28 Pages Posted: 4 Aug 2008

See all articles by Viktor Steiner

Viktor Steiner

Zentrum Fuer Europaeische Wirtschaftsforschung (ZEW) - Center for European Economic Research; IZA Institute of Labor Economics

Katharina Wrohlich

DIW Berlin, German Institute for Economic Research

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.

Keywords: higher education, financial incentives, competing risk model

JEL Classification: H52, H24, I28

Suggested Citation

Steiner, Viktor and Wrohlich, Katharina, Financial Student Aid and Enrollment into Higher Education: New Evidence from Germany. IZA Discussion Paper No. 3601. Available at SSRN: https://ssrn.com/abstract=1184011 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Viktor Steiner (Contact Author)

Zentrum Fuer Europaeische Wirtschaftsforschung (ZEW) - Center for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Katharina Wrohlich

DIW Berlin, German Institute for Economic Research ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

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