Fostering household formation: evidence from a Spanish rental subsidy

Aparicio-Fenoll, A. and Oppedisano, V. 2015. Fostering household formation: evidence from a Spanish rental subsidy. The B.E. Journal of Economic Analysis & Policy. 15 (1), pp. 53-84. doi:10.1515/bejeap-2014-0003

TitleFostering household formation: evidence from a Spanish rental subsidy
AuthorsAparicio-Fenoll, A. and Oppedisano, V.
Abstract

In Southern Europe youngsters leave their parental home significantly later than in Northern Europe and the United States. In this paper, we study the effect of a monthly cash subsidy on the probability that young adults live apart from parents and childbearing. 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
estimates show positive effects of the policy on the probability of living apart from parents, living with a romantic partner, and chidbearing for 22 year-olds compared to 21 year-olds. Results persist when the sample is
expanded to include wider age ranges. 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 household formation because the cost is too high relative to their income.

KeywordsHousehold formation, Fertility, Rental subsidy, Conditional cash transfer
JournalThe B.E. Journal of Economic Analysis & Policy
Journal citation15 (1), pp. 53-84
ISSN1935-1682
Year2015
PublisherDe Gruyter
Accepted author manuscriptIZAwp.pdf
Digital Object Identifier (DOI)doi:10.1515/bejeap-2014-0003
Publication dates
Published17 Jul 2014

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