IDEAS home Printed from https://ideas.repec.org/a/bpj/bejeap/v15y2015i1p32n10.html
   My bibliography  Save this article

Fostering Household Formation: Evidence from a Spanish Rental Subsidy

Author

Listed:
  • Aparicio-Fenoll Ainhoa

    (Collegio Carlo Alberto, Turin, Italy)

  • Oppedisano Veruska

    (London Metropolitan University, Old Castle Street, London E17NT, UK Institute for Fiscal Studies, Ridgmunt Street 7, London WC1E7AE, UK)

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% 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 childbearing 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.

Suggested Citation

  • Aparicio-Fenoll Ainhoa & Oppedisano Veruska, 2015. "Fostering Household Formation: Evidence from a Spanish Rental Subsidy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(1), pages 53-84, January.
    • Handle: RePEc:bpj:bejeap:v:15:y:2015:i:1:p:32:n:10
    DOI: 10.1515/bejeap-2014-0003
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejeap-2014-0003
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/bejeap-2014-0003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sascha Becker & Samuel Bentolila & Ana Fernandes & Andrea Ichino, 2010. "Youth emancipation and perceived job insecurity of parents and children," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(3), pages 1047-1071, June.
    2. Lee, Kwan Ok & Painter, Gary, 2013. "What happens to household formation in a recession?," Journal of Urban Economics, Elsevier, vol. 76(C), pages 93-109.
    3. Paola Giuliano, 2007. "Living Arrangements in Western Europe: Does Cultural Origin Matter?," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 927-952, September.
    4. Gianna Claudia Giannelli & Chiara Monfardini, 2003. "Joint decisions on household membership and human capital accumulation of youths. The role of expected earnings and local markets," Journal of Population Economics, Springer;European Society for Population Economics, vol. 16(2), pages 265-285, May.
    5. Mario García-Ferreira & Ernesto Villanueva, 2007. "Employment risk and household formation: evidence from differences in firing costs," Working Papers 0737, Banco de España.
    6. Nuno Martins & Ernesto Villanueva, 2009. "Does High Cost of Mortgage Debt Explain Why Young Adults Live with Their Parents?," Journal of the European Economic Association, MIT Press, vol. 7(5), pages 974-1010, September.
    7. Marco Manacorda & Enrico Moretti, 2006. "Why do Most Italian Youths Live with Their Parents? Intergenerational Transfers and Household Structure," Journal of the European Economic Association, MIT Press, vol. 4(4), pages 800-829, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Enrica Di Stefano, 2019. "Leaving your mamma: why so late in Italy?," Review of Economics of the Household, Springer, vol. 17(1), pages 323-347, March.
    2. Amuedo-Dorantes, Catalina & Borra, Cristina, 2021. "The role of non-contributory pensions on internal mobility in Spain," Labour Economics, Elsevier, vol. 70(C).
    3. Olga Cantó & Inmaculada Cebrián & Gloria Moreno, 2019. "Household precariousness and youth living arrangements in Spain: evidence for a complete business cycle," Working Papers 499, ECINEQ, Society for the Study of Economic Inequality.
    4. Catalina Amuedo-Dorantes & Cristina Borra, 2018. "Internal Mobility after the Expansion of the Welfare State: Evidence from Spain," RF Berlin - CReAM Discussion Paper Series 1806, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    5. Gianluca Cerruti & Gianluca Mazzarella & Mauro Migliavacca, 2023. "Employment protection legislation and household formation: evidence from Italy," Review of Economics of the Household, Springer, vol. 21(3), pages 913-939, September.
    6. Adamopoulou, Effrosyni, 2016. "Living Arrangements of the Youth: Determinants and Gender Differences/Patrones de convivencia de los jóvenes: Determinantes y diferencias por sexos," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 34, pages 35-44, Enero.
    7. Dirección General de Economía y Estadística, 2020. "El mercado de la vivienda en España entre 2014 y 2019," Occasional Papers 2013, Banco de España.
    8. Namkee Ahn & Virginia Sánchez-Marcos, 2017. "Emancipation under the great recession in Spain," Review of Economics of the Household, Springer, vol. 15(2), pages 477-495, June.
    9. Enrica Di Stefano, 2017. "Leaving your mamma: why so late in Italy?," Temi di discussione (Economic working papers) 1144, Bank of Italy, Economic Research and International Relations Area.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aparicio Fenoll, Ainoa & Oppedisano, Veruska, 2012. "Fostering the Emancipation of Young People: Evidence from a Spanish Rental Subsidy," IZA Discussion Papers 6651, Institute of Labor Economics (IZA).
    2. Christopoulou, Rebekka & Pantalidou, Maria, 2017. "The parental home as labor market insurance for young Greeks during the crisis," GLO Discussion Paper Series 158, Global Labor Organization (GLO).
    3. Namkee Ahn & Virginia Sánchez-Marcos, 2017. "Emancipation under the great recession in Spain," Review of Economics of the Household, Springer, vol. 15(2), pages 477-495, June.
    4. Effrosyni Adamopoulou & Ezgi Kaya, 2018. "Young Adults Living with their Parents and the Influence of Peers," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 80(3), pages 689-713, June.
    5. Adamopoulou, Effrosyni, 2016. "Living Arrangements of the Youth: Determinants and Gender Differences/Patrones de convivencia de los jóvenes: Determinantes y diferencias por sexos," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 34, pages 35-44, Enero.
    6. Tindara Addabbo & Randi Kjeldstad, 2012. "Household affiliation among young adult women and men in Italy and Norway: The significance of work, culture, and money," Department of Economics (DEMB) 0005, University of Modena and Reggio Emilia, Department of Economics "Marco Biagi".
    7. Fernandes Ana & Becker Sascha O & Bentolila Samuel & Ichino Andrea, 2008. "Income Insecurity and Youth Emancipation: A Theoretical Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-42, July.
    8. Sascha Becker & Samuel Bentolila & Ana Fernandes & Andrea Ichino, 2010. "Youth emancipation and perceived job insecurity of parents and children," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(3), pages 1047-1071, June.
    9. Samuel Bentolila & Ildefonso Mendez & Francisco Maeso, 2015. "Leaving Home with a Partner," CESifo Working Paper Series 5381, CESifo.
    10. Gianluca Cerruti & Gianluca Mazzarella & Mauro Migliavacca, 2023. "Employment protection legislation and household formation: evidence from Italy," Review of Economics of the Household, Springer, vol. 21(3), pages 913-939, September.
    11. repec:mod:depeco:0005 is not listed on IDEAS
    12. Francesca Modena & Concetta Rondinelli, 2011. "Leaving home and housing prices. The experience of Italian youth emancipation," Department of Economics Working Papers 1101, Department of Economics, University of Trento, Italia.
    13. Erich Battistin & Michele De Nadai & Mario Padula, 2015. "Roadblocks on the Road to Grandma�s House: Fertility Consequences of Delayed Retirement," Working Papers 748, Queen Mary University of London, School of Economics and Finance.
    14. Cobb-Clark, Deborah A., 2008. "Leaving Home: What Economics Has to Say about the Living Arrangements of Young Australians," IZA Discussion Papers 3309, Institute of Labor Economics (IZA).
    15. Christopoulou, Rebekka & Pantalidou, Maria, 2022. "The parental home as labor market insurance for young Greeks during the Great Recession," Journal of Demographic Economics, Cambridge University Press, vol. 88(3), pages 313-350, September.
    16. Francisco Maeso & Ildefonso Mendez, 2008. "The Role of Partnership Status and Expectations on the Emancipation Behaviour of Spanish Graduates," Working Papers wp2008_0812, CEMFI.
    17. Luca Stella, 2017. "Living arrangements in Europe: whether and why paternal retirement matters," Review of Economics of the Household, Springer, vol. 15(2), pages 497-525, June.
    18. Margaret Katherine McKeehan, 2018. "The EITC and the labor supply of adult dependents: direct effects and family income effects," Review of Economics of the Household, Springer, vol. 16(3), pages 791-807, September.
    19. Battistin, Erich & De Nadai, Michele & Padula, Mario, 2014. "Roadblocks on the Road to Grandma's House: Fertility Consequences of Delayed Retirement," IZA Discussion Papers 8071, Institute of Labor Economics (IZA).
    20. Viola Angelini & Anne Laferrère, 2013. "Parental altruism and nest leaving in Europe: evidence from a retrospective survey," Review of Economics of the Household, Springer, vol. 11(3), pages 393-420, September.
    21. Cristina Barceló & Ernesto Villanueva, 2018. "The risk of job loss, household formation and housing demand: evidence from differences in severance payments," Working Papers 1849, Banco de España.

    More about this item

    Keywords

    household formation; fertility; rental subsidy; conditional cash transfer;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:15:y:2015:i:1:p:32:n:10. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.