Earn or Learn? - An empirical analysis of labour supply responses to financial (dis)incentives among Norwegian students

Jannicke Sahl, OFS scholarship recipient 2020

Abstract:

In this thesis I study Norwegian students’ labour supply responses to the phase-out of student benefits which occurs as students reach the income limit set by the Norwegian State Educational Loan Fund. The phase-out of benefits can be interpreted as an increase in the effective marginal tax rate, which causes a kink in the students’ budget set. I study students’ responses by looking for bunching evidence around this kink. The estimated amount of bunching is used to calculate the elasticity of earnings with respect to the net-of-tax rate. In line with the standard model of labour supply I find evidence of significant bunching among students. Despite the clear bunching evidence, the bunching amount translates into an earnings elasticity of 0.006. In addition, an upper bound on the earnings elasticity is estimated to 0.29.

 

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Published Jan. 11, 2022 2:21 PM - Last modified Jan. 11, 2022 2:21 PM