Do Public Scholarships Crowd Out Parental Transfers ? Evidence from France

This paper investigates the extent to which means-tested scholarships received by higher education students in France crowd out parental financial support. We estimate a private transfer function using survey data completed in 2014 on a sample of students aged between 18 and 24. When introducing the amount of public scholarship as exogenous covariate, we find that one additional euro of scholarship is associated with a decrease in private transfers of 0.40-0.50 euro. We also consider an instrumental variable strategy which exploits the non-linear schedule of the scholarship amount and find a larger effect with a decrease of 0.50-0.65 euros. Overall, our results suggest that a substantial part of student scholarship benefits low-income parents through a reduction in the money they give to their student children