The academic and employment effects of study grant income limit raises
Kylliäinen, Olavi (2024)
2024
Kauppatieteiden maisteriohjelma - Master's Programme in Business Studies
Johtamisen ja talouden tiedekunta - Faculty of Management and Business
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Hyväksymispäivämäärä
2024-10-04
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202410019039
https://urn.fi/URN:NBN:fi:tuni-202410019039
Tiivistelmä
The income limits for Finnish study grants have historically imposed a restricting effect on students’ earnings, particularly during academic terms. To mitigate this effect and enhance student employment and financial well-being, the limits were raised in 2022 and 2023.
In this thesis, I examine the academic and employment effects of these recent raises to the study grant income limits. Using the bunching framework, I assess how students adjust their earnings in a response to the proportional tax notch created by the income limit. My analysis reveals considerable bunching around the income limits in 2021, with the raises successfully reducing the excess mass just below the limits in subsequent years.
In addition to evaluating the impact on employment, I investigate the potential indirect effects of these income limit raises on academic success, utilising a Difference-in-Differences approach to analyse changes in study credit accumulation before and after the policy changes by comparing students who react to the notches to those who do not. The findings suggest that the raised income limits significantly reduced the restrictive effects on student employment without negatively affecting academic performance.
In this thesis, I examine the academic and employment effects of these recent raises to the study grant income limits. Using the bunching framework, I assess how students adjust their earnings in a response to the proportional tax notch created by the income limit. My analysis reveals considerable bunching around the income limits in 2021, with the raises successfully reducing the excess mass just below the limits in subsequent years.
In addition to evaluating the impact on employment, I investigate the potential indirect effects of these income limit raises on academic success, utilising a Difference-in-Differences approach to analyse changes in study credit accumulation before and after the policy changes by comparing students who react to the notches to those who do not. The findings suggest that the raised income limits significantly reduced the restrictive effects on student employment without negatively affecting academic performance.