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Author: Abbott, Brant
Resulting in 2 citations.
1. Abbott, Brant
Gallipoli, Giovanni
Meghir, Costas
Violante, Giovanni L.
Education Policy and Intergenerational Transfers in Equilibrium
NBER Working Paper No. 18782, National Bureau of Economic Research, February 2013.
Also: http://www.nber.org/papers/w18782
Cohort(s): Children of the NLSY79, NLSY79, NLSY97
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Credit/Credit Constraint; Current Population Survey (CPS) / CPS-Fertility Supplement; Educational Costs; Financial Assistance; I.Q.; Intergenerational Patterns/Transmission; Panel Study of Income Dynamics (PSID); Peabody Individual Achievement Test (PIAT- Math); Transfers, Family; Transfers, Financial

This paper compares partial and general equilibrium effects of alternative financial aid policies intended to promote college participation. We build an overlapping generations life-cycle, heterogeneous-agent, incomplete-markets model with education, labor supply, and consumption/ saving decisions. Altruistic parents make inter vivos transfers to their children. Labor supply during college, government grants and loans, as well as private loans, complement parental transfers as sources of funding for college education. We find that the current financial aid system in the U.S. improves welfare, and removing it would reduce GDP by two percentage points in the long-run. Any further relaxation of government-sponsored loan limits would have no salient effects. The short-run partial equilibrium effects of expanding tuition grants (especially their need-based component) are sizeable. However, long-run general equilibrium effects are 3-4 times smaller. Every additional dollar of government grants crowds out 20-30 cents of parental transfers.
Bibliography Citation
Abbott, Brant, Giovanni Gallipoli, Costas Meghir and Giovanni L. Violante. "Education Policy and Intergenerational Transfers in Equilibrium." NBER Working Paper No. 18782, National Bureau of Economic Research, February 2013.
2. Abbott, Brant
Gallipoli, Giovanni
Meghir, Costas
Violante, Giovanni L.
Education Policy and Intergenerational Transfers in Equilibrium
Journal of Political Economy 127,6 (December 2019): 2569-2624.
Also: https://www.journals.uchicago.edu/doi/full/10.1086/702241
Cohort(s): Children of the NLSY79, NLSY79, NLSY97
Publisher: University of Chicago Press
Keyword(s): Current Population Survey (CPS) / CPS-Fertility Supplement; Financial Assistance; Intergenerational Patterns/Transmission; Panel Study of Income Dynamics (PSID); Parental Influences; Student Loans; Survey of Consumer Finances (SCF); Transfers, Parental

We examine the equilibrium effects of college financial aid policies building an overlapping-generations life cycle model with education, labor supply, and saving decisions. Cognitive and noncognitive skills of children depend on parental education and skills and affect education and labor market outcomes. Education is funded by parental transfers that supplement grants, loans, and student labor supply. Crowding out of parental transfers by government programs is sizable and cannot be ignored. The current system of federal aid improves long-run welfare by 6 percent. More generous ability-tested grants would increase welfare and dominate both an expansion of student loans and a labor tax cut.
Bibliography Citation
Abbott, Brant, Giovanni Gallipoli, Costas Meghir and Giovanni L. Violante. "Education Policy and Intergenerational Transfers in Equilibrium." Journal of Political Economy 127,6 (December 2019): 2569-2624.