Gone with the windfall : how do housing allowances affect student co-residence?

Drawing on five cross-sections of the French Housing Survey, this paper examines the effects on co-residence with their parents of the extension of housing allowances to students that took place between 1991 and 1993. Two effects are found. First housing allowances provide an increased opportunity for students to move out of their parents’ home. Second, the subsidy affects not just the decision to move out, but location and housing quality choices. Finally we suggest a model to identify how much of the allowance came as a windfall gain to parents. Defining the windfall gain as being the subsidies distributed to students who can study locally and whose choice would have been to live independently without the subsidy, we find that as much as half of the allowance came as a windfall gai to students and their parents.