Veruska Oppedisano (University College London, UCL)

“Youngsters’ Reaction to Emancipation Incentives”
by Ainhoa Aparicio and Veruska Opedisano

Abstract

We study the income and substitution effects of a rental subsidy together with its effectiveness in promoting youngsters’ independence. We exploit the introduction of a sizeable monthly subsidy in Spain in 2008, granted to all youngsters in the 22-29 age brackets who earn a stable source of income in order to promote youngsters’ emancipation and financial independence. Robust difference in differences and regression discontinuity estimates show that the policy increases emancipation rates, especially among youngsters living in high rental price areas. Hours worked decrease in low rental price areas, whilst increase in high rental price ones. Eligible youngsters do not increase their overall expenditures, but change their composition: expenditures in alcohol, drugs and tobacco increase, whilst those in transports, hobbies and culture decrease.