9
Policy Forum: Youth Transitions Youth Allowance and the Financial Position of Young Australians Chris Ryan* Abstract This article uses data that follow young Australians to their mid-20s to assess how their views of their nancial position change as their circumstances change. Full-time students in receipt of Youth Allowance are the least satised about their nancial position, even among other students, and experience more nancial stress-related incidents than other young people. Little of these differences from other groups seem to be a consequence of the receipt of Youth Allowance. Furthermore, the differences do not translate into recipients having lower levels of life satisfaction, unlike young people in receipt of other forms of government income support. 1. Introduction A series of studies since 2000 have pointed to the nancial difculties experienced by stu- dents (see, for example, Centre for the Study of Higher Education 2008). Results from surveys of university students also commonly point to students not purchasing textbooks, sometimes going without food or meals and having to resort to the use of loans to fund living expenses (James et al. 2007; Centre for the Study of Higher Education 2008; Bexley et al. 2013). In this article, I look at the role of Youth Allowance in addressing the nancial stress of tertiary students. The research questions are: Does the receipt of Youth Allowance alleviate nancial hardship among students? and Does nancial hardship translate into dissatisfaction with life among young Australians? Data from the Longitudinal Surveys of Australian Youth (LSAY) cohorts are analysed: specically, year 9 students from 1998 (Y98). 1 These students were surveyed each year until their mid-20s (2009 for the Y98 cohort). From the third wave, when most were at school in Year 11, until they completed their school and/ or post-school studies, students in this LSAY cohort were asked about their own or their parentsreceipt of Youth Allowance and the amount paid. Respondents were also asked in each wave a series of questions about their satisfaction with their nancial position and their life in general. In addition, they were asked about their experience of a series of nancial stress indicators, such as having had to borrow money from family and friends. These data make it possible to see how the responses of the same * Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia; email <[email protected]>. This research is drawn from a larger study conducted as part of the Longitudinal Surveys of Australian Youth analytical program. The views and opinions expressed in this document are those of the author and do not necessarily reect the views of the Australian Government, state and territory governments or the National Centre for Vocational Education Research. The Australian Economic Review, vol. 47, no. 1, pp. 11523 ° C 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research Published by Wiley Publishing Asia Pty Ltd

Youth Allowance and the Financial Position of Young Australians

  • Upload
    chris

  • View
    213

  • Download
    2

Embed Size (px)

Citation preview

Page 1: Youth Allowance and the Financial Position of Young Australians

Policy Forum: Youth Transitions

Youth Allowance and the Financial Position ofYoung Australians

Chris Ryan*

Abstract

This article uses data that follow youngAustralians to their mid-20s to assess howtheir views of their financial position change astheir circumstances change. Full-time studentsin receipt of Youth Allowance are the leastsatisfied about their financial position, evenamong other students, and experience morefinancial ‘stress’-related incidents than otheryoung people. Little of these differences fromother groups seem to be a consequence of thereceipt of Youth Allowance. Furthermore, thedifferences do not translate into recipientshaving lower levels of life satisfaction, unlikeyoung people in receipt of other forms ofgovernment income support.

1. Introduction

A series of studies since 2000 have pointed tothe financial difficulties experienced by stu-dents (see, for example, Centre for the Study ofHigher Education 2008). Results from surveysof university students also commonly point tostudents not purchasing textbooks, sometimesgoing without food or meals and having toresort to the use of loans to fund living expenses(James et al. 2007; Centre for the Study ofHigher Education 2008; Bexley et al. 2013).

In this article, I look at the role of YouthAllowance in addressing the financial stress oftertiary students. The research questions are:Does the receipt of Youth Allowance alleviatefinancial hardship among students? and Doesfinancial hardship translate into dissatisfactionwith life among young Australians?

Data from the Longitudinal Surveys ofAustralian Youth (LSAY) cohorts are analysed:specifically, year 9 students from 1998 (Y98).1

These students were surveyed each year untiltheir mid-20s (2009 for the Y98 cohort). Fromthe third wave, when most were at school inYear 11, until they completed their school and/or post-school studies, students in this LSAYcohort were asked about their own or theirparents’ receipt of Youth Allowance and theamount paid.

Respondents were also asked in each wave aseries of questions about their satisfaction withtheir financial position and their life in general.In addition, they were asked about theirexperience of a series of financial stressindicators, such as having had to borrowmoneyfrom family and friends. These data make itpossible to see how the responses of the same

* Melbourne Institute of Applied Economic and SocialResearch, The University of Melbourne, Victoria 3010Australia; email <[email protected]>. This researchis drawn from a larger study conducted as part of theLongitudinal Surveys of Australian Youth analyticalprogram. The views and opinions expressed in thisdocument are those of the author and do not necessarilyreflect the views of the Australian Government, state andterritory governments or the National Centre for VocationalEducation Research.

The Australian Economic Review, vol. 47, no. 1, pp. 115–23

�C 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social ResearchPublished by Wiley Publishing Asia Pty Ltd

Page 2: Youth Allowance and the Financial Position of Young Australians

individuals change as they move throughvarious ‘states’ from year to year; that is,become full-time students, get or lose a job,become eligible for Youth Allowance, moveout of home, become a parent and so on.

The data generally confirm the poorerfinancial position of students found elsewhere.Full-time students in receipt of Youth Allow-ance tend to be the least satisfied about theirfinancial position, even among students, andexperience more financial ‘stress’ or hardship-related incidents than other young people.However, these differences between groupsfall substantially in regression analysis whichcontrols for personal characteristics such ashaving a consistently positive or negativeattitude to their circumstances. Interestingly,their poor financial position does not translateinto them reporting lower levels of lifesatisfaction than other young Australians.

The next section contains a brief review ofthe literature on the financial position ofAustralian students, whilst Section 3 containsa summary of the operation of the YouthAllowance scheme. The data are describedin Section 4 and the methodology used toanalyse them is summarised briefly in Section 5.The results are set out in Section 6, with someconcluding remarks in Section 7.

2. Previous Literature on the FinancialPosition of Australian Students

As noted in Section 1, university studentsexhibit high levels of dissatisfaction in generalabout their financial position. For example,almost one-half of the university studentssurveyed in James et al. (2007) agreed thattheir ‘financial situation was often a source ofworry to them’ (p. 44). Many students, forexample, were concerned that the amount ofincome support was insufficient to meetfundamental living costs.

Negative comments about the operation ofthe Australian student income system were alsomade in Bradley (2008). Among them, the lowbenefit level was seen as inducing recipients ofincome support into longer hours of employ-ment to the detriment of their studies. None ofthis evidence that students who receive income

support struggle financially strictly provides anindication of how the receipt of student incomesupport actually affects their financial position.

Indeed, it seems obvious, and as indicated inJames et al. (2007), Bradley (2008), Chapmanand Lounkaew (2009), Curtis, Mlotkowski andLumsden (2012) and Ryan (2013), that individ-ual students themselves must have thought theywould be better off receiving income supportthan not receiving it. Certainly, students havetaken advantage of the eligibility criteria for the‘independent’ category to obtain it.

3. How Youth Allowance Worked until2010

TheYouthAllowance system applicable duringthe period covered by this study was introducedon 1 July 1998 and operated until 2010, whenthe Gillard government changed aspects of theeligibility criteria.2 The introduction of YouthAllowance was designed to redress perceiveddisincentives for young people to undertakeeducation and training. Practically, the removalof the study disincentive involved an extensionof parental means tests (income and asset tests)for eligibility for Youth Allowance amongthose looking for work.

Youth Allowance payments received byindividuals also depend on the number ofsiblings, whether or not they live with theirparents or guardians and whether they aretreated as independent for Youth Allowanceeligibility purposes.

Students whose parents’ incomewas below aspecified threshold, given their number ofsiblings, and whose household wealth wassufficiently low, received the maximum pay-ment. Individuals whose parents’ income wasabove that threshold received a lower payment,reduced by $1 per annum for every $4 that theirparental income exceeded the threshold (ignor-ing a personal income test—described below—that is, applied after the parental income test). In2008, individuals living at home whose paren-tal income was less than $31,400 received themaximum payment of $5,057 per annum.Those with parental incomes above that butless than $51,628 received a reduced payment,whilst those with parental incomes beyond

116 The Australian Economic Review March 2014

�C 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

Page 3: Youth Allowance and the Financial Position of Young Australians

$51,628 were ineligible for student incomesupport.3

The annual payment for those living at homeaged 18 years or over in 2008 was $6,080,whilst both the living-away-from-home andindependent rates were $9,240. The income-free area of the personal income test for studentsin 2008 was $236 per fortnight. Any incomeabove that to $316 reduced the Youth Allow-ance payment by 50 per cent of each additionaldollar of income, whilst income above $316reduced the payment by 60 per cent of eachadditional dollar of income. Asset tests appliedto family income if the student received adependent rate and on their personal assets ifthey received the independent rate.

4. Longitudinal Surveys of AustralianYouth Data on the Financial Position ofYoung Australians

The data are drawn from the LSAY. The Year 9students in 1998 were drawn as a two-stagecluster sample of Australian school children(sampling schools first, then students withinschools). Around 14,000 individuals in 300schools were surveyed initially in the cohort.Population means in this article are estimatedusing weights to account for the sampledesign.4

The LSAY subjects in this cohort were askeda series of questions about how they viewedtheir lives in most waves from the data (everyyear from wave three of the data until their lastinterview). Subjects were asked to indicatewhether they were ‘very happy’, ‘happy’,‘unhappy’ or ‘very unhappy’ about a set of14 factors. Among these factors were:

� ‘the money you get each week’;

� ‘your standard of living’; and

� ‘your life as a whole’.

The first two indicators listed above willobviously capture some aspects of the financialposition of respondents, whilst the last indicatorprovides an indicator of respondents’ sense ofwell-being. In addition, it is possible to

combine the set of 14 indicators via factoranalysis into an overall ‘life satisfaction’ scale.

Subjects were also asked a series of ques-tions from 2002 that address their financialposition more directly. First, subjects wereasked whether, in the past 12 months, becauseof a ‘shortage of money’ they had experiencedany of a series of indicators of financialhardship, including whether:

� they had to ask family or friends for money;

� they had to borrowmoney just to live on; and

� they could not buy textbooks or other studymaterials.

In addition, subjects were asked a summaryquestion about how well they were managingfinancially on a five-point scale. Respondents inthe Y98 cohort were asked these financial stressquestions in all years from 2002 to 2009. Thiscovers the period from the first year thatsubjects might have been in university.

Responses to the life satisfaction andfinancial stress indicators, according to a setof employment and study status factors pooledacross all years, appear in Table 1. In terms ofthe satisfaction indicators in the upper panel ofeach table, most people tend to be ‘happy’ or‘very happy’ with their situation. Full-timestudents in receipt of Youth Allowance atuniversity or in vocational education andtraining (VET) tend to be the least happy,even among other students from their sector.The gap in the proportion reporting they are‘happy’ or ‘very happy’ with the money theyget each week is generally at least 10 percentagepoints, compared to other students. From thelower panel, they are substantially more likelyto have had to borrow money from family orfrom others to live on in the preceding12 months than other individuals. Once more,the gap in the proportion reporting they had toborrow money from family or from others tolive on is generally at least 10 percentagepoints, compared to other students. Students onYouth Allowance have the lowest rates ofresponding that they are managing fairly orvery easily financially.

�C 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

Ryan: Youth Allowance and the Financial Position of Young Australians 117

Page 4: Youth Allowance and the Financial Position of Young Australians

Those students who supplement their YouthAllowance via part-time work report higherlevels of satisfaction (in the top panel) but moreincidence of financial hardship (in the lowerpanel). The incidence of part-timework is muchlower among both university and full-time VETstudents in receipt of Youth Allowance thanother students in the same sector. A differential

pattern is also observed among full-time VETstudents. Whilst this low level of participationin employment might reflect the parameters ofthe personal income test of the scheme,standard labour supply theory would alsolead us to expect receipt of unearned incomethrough the Youth Allowance would inducesome individuals who would work otherwise

Table 1 Life Satisfaction and Financial Stress Indicators: Y98 Cohort

Activity

Life satisfaction indicator

Moneyeach

weeka (%)Standard oflivinga (%)

Life as awholea (%)

Lifesatisfaction

scale Observations

Not working, not studying 61.7 94.4 96.7 –0.473 3,472Working part-time 82.6 97.6 98.3 –0.027 7,018Working full-time 86.4 98.5 99.1 0.119 19,641Full-time VET, not working 68.9 94.4 98.6 –0.313 286Full-time VET, part-time work 79.7 98.3 98.6 0.084 667Full-time VET, student allowance 63.8 95.9 97.7 –0.293 302Full-time VET, student allowance part-time work 79.3 98.3 99.0 –0.026 289At university, not working 75.3 98.2 98.6 –0.221 1,546At university, part-time work 86.2 98.9 99.4 0.083 5,668At university, student allowance 68.5 96.5 98.5 –0.275 1,286At university, student allowance part-time work 79.3 97.5 99.4 0.003 2,221Total 81.8 97.8 98.7 0.000 42,396

Asked familyor friendsfor moneyb

(%)

Financial stress indicator

Borrowedmoneyjust tolive onb

(%)

Could notbuy textbooks

or otherstudy

materialsb

(%)

Managingfinanciallyc

(%)

Everborrowedmoney justto live onb

(%)

Not working, not studying 43.1 20.6 5.8 55.4 49.5Working part-time 33.9 13.3 4.9 69.8 40.0Working full-time 22.3 8.6 2.0 79.7 33.7Full-time VETd, not working 42.9 11.8 9.2 50.6 32.5Full-time VET, part-time work 41.7 7.8 7.8 67.8 26.8Full-time VET, student allowance 38.3 15.3 16.1 51.4 32.6Full-time VET, student allowance, part-time work 38.5 13.5 11.4 65.6 33.2At university, not workinge 36.6 8.6 11.1 66.8 28.8At university, part-time worke 38.7 8.9 10.8 74.9 30.6At university, student allowancee 47.2 16.4 22.9 51.9 42.5At university, student allowance, part-time worke 48.8 18.0 22.4 61.8 45.7Total 31.2 11.3 6.0 72.5 36.4

Notes: (a) Proportion of ‘happy’ or ‘very happy’.(b) Proportion who experienced event.(c) Proportion of ‘fairly easy’ or ‘very easy’.(d) VET denotes vocational education and training.(e) I do not distinguish between full-time and part-time university students because the vast majority of university students ofthis age work full-time.

Source: Estimated from the Longitudinal Surveys of Australian Youth Y98 2002–09 waves.

�C 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

118 The Australian Economic Review March 2014

Page 5: Youth Allowance and the Financial Position of Young Australians

not to do so. Of note from the table is that thepractice of borrowing money from family orfrom others to live on is quite widespreadamong young people, especially among thosestudying who also receive Youth Allowance.5

5. Methodology

The reports given by individuals about theirfinancial situation each year will reflect theirobjective circumstances and other factors.Among these other factors may be a tendencyto provide consistently positive or negativeviews about their circumstances because theirpersonalities are disposed in particular ways(see evidence of this in Ryan 2012; Ribar2013). If people who give consistently positiveviews about their position are more likely to bein some of the specific activities identified inTable 1, the simple apparent relationshipsbetween the activities and the financial positionof individuals may not reflect the true relation-ship accurately. It is possible to exploit thelongitudinal nature of the LSAY data to removeany tendency to provide similar responses fromthe reported financial position of young peoplevia regression estimation that accounts forindividual ‘fixed effects’. The parameters thenestimated are the effects on the indicator of theirfinancial position of changing the activity statusof individuals. The results are reported inTable 2 and Appendix 1.

The regression estimates identify how theresponses to the financial satisfaction and stressindictors might differ depending on whether,when surveyed, individuals were: living withtheir parents; partnered; living with theirchildren; employed in any job; employed full-time; buying a house; working as an apprentice;studying at university; studying full-time for avocational education qualification; a part-timestudent; in receipt of government incomesupport or in receipt of Youth Allowance forpost-school studies.

6. Results

Results for the full set of fixed effects estimatesare presented in Appendix 1. The results forthese indicators for the parameter on thevariable reflecting receipt of Youth Allowancefor post-school studies and for being auniversity student for each cohort are presentedin Table 2. These estimated effects take accountof whether the individual has a part-time job ornot, their living arrangements and other factors.

The estimates are based on fixed effects leastsquares regression equations, where the depen-dent variable in most cases is a dummyvariable. That is, it takes the value of 1 for anindividual if a condition is met (the individualhas experienced financial stress or is ‘happy’ or‘very happy’with their financial position or lifeor they are managing easily financially) and 0

Table 2 Regression-Based Fixed Effects of Student Youth Allowance (YA)on Financial Satisfaction and Stress Indicators, Y98 Cohorta

Indicator

YA student recipient effect University student effect

Parameter SE Parameter SE

Money each week –0.029**b 0.008 0.009 0.006Standard of living –0.005* 0.003 0.003 0.002Life as a whole 0.003 0.002 0.003 0.002Life satisfaction scale –0.004 0.010 –0.008 0.008Asked family or friends for money 0.028** 0.009 0.056** 0.007Borrowed money just to live on 0.029** 0.006 0.001 0.005Could not buy textbooks or other study materials 0.068** 0.005 0.063** 0.004Managing financially –0.071** 0.009 –0.056** 0.007

Notes: (a) Full results for these regression equations appear in Appendix 1.(b) * and ** indicate significance at the 10 and 1 per cent levels, respectively.

Sources: Estimated from the Longitudinal Surveys of Australian Youth Y95 2002–06 cohort waves and the Y98 2002–09cohort waves.

�C 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

Ryan: Youth Allowance and the Financial Position of Young Australians 119

Page 6: Youth Allowance and the Financial Position of Young Australians

otherwise. Only the life satisfaction scale is acontinuous variable. Therefore, for most of theequations, the estimated parameter in Table 2shows how the probability of meeting thecondition changes if an individual changes stateeither to or from being a student YouthAllowance recipient. For example, in the Y98cohort, student Youth Allowance recipientswere 2.9 percentage points less likely toindicate they were ‘happy’ or ‘very happy’with the money they received each week,compared to others.6

Being a university student is associated withexperiencing some financial hardship: studentsare less likely to believe they are managing wellfinancially, are more likely to borrow moneyfrom their family and go without educationalbooks, but are not much more likely to borrowmoney to live on from others. Results for full-time VET students are qualitatively similar (seeTables A1 and A2).

Receipt of Youth Allowance is also clearlyassociated with reports of higher financialhardship across the range of indicators. Theseeffects are in addition to those experienced byother students, since being a student is includedelsewhere in the regression equation. YouthAllowance recipients are more likely to borrowfrom family and friends, as well as others, andgo without educational books and materialsthan other university students. They are alsoless likely to believe they are managing wellfinancially and are less satisfied with theirfinancial position.

These effects are cumulative. The full effectof being a university student in receipt of YouthAllowance on financial outcomes is the sum ofthe two effects in Table 2. In general, thisappears to be a large negative effect. But, asnoted in relation to Table 1, most students workpart-time, including those onYouth Allowance.The results in Tables A1 and A2 point to largepositive effects from any type of job onfinancial outcomes, of a magnitude that wouldgenerally counterbalance the Youth Allowanceand student effects.7

Notice that the estimated parametersreported in Table 2 are substantially lowerthan the gaps in reported financial well-beingand the incidence of hardship apparent in

Table 1, where the gaps were always in excessof 10 percentage points. Both the inclusion ofother circumstances or activities engaged in byindividuals and the fixed effects specificationreduce the magnitude of the parameters on thereceipt of Youth Allowance.

Furthermore, the negative responses byYouth Allowance recipients about their finan-cial position and the financial hardship theyface do not translate into them having morenegative views about their overall life satisfac-tion. These parameters are not significantlydifferent from zero. This non-significance doesnot arise only because there is little variation inresponses to the ‘the life as a whole’ question,since nearly everyone indicates they are‘happy’ or ‘very happy’. Where this equationwas estimated where the indicator takes thevalue of one only for those who were veryhappy with their life as a whole, the parameteron the Youth Allowance variable was notsignificant in that case either. These responsescontrast with those of general governmentincome support recipients: they report less-satisfied views about their financial position,higher incidence of financial hardship andlower levels of overall life satisfaction.

It is possible to include the personal incomeof individuals in the regression equations justdiscussed, where personal income is measuredfrom the weekly wage and government pay-ment levels reported by individuals. Thisenables us to estimate some kind of moneyequivalent of the level of disadvantage reportedby individuals on student income support.This comparison works best for the questionof how satisfied individuals are with the moneythey get each week. The estimates suggestthat income support recipients would needsubstantially higher payments from YouthAllowance per week (approaching double theamount) to remove their reported level offinancial dissatisfaction, given the coefficienton income.8

7. Concluding Remarks

The regression analysis confirms the worseself-assessed financial position of full-timestudents in receipt of Youth Allowance,

�C 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

120 The Australian Economic Review March 2014

Page 7: Youth Allowance and the Financial Position of Young Australians

although the gaps are much smaller in theregression estimates than those that areapparent in the raw responses. In part, then,this is evidence that the eligibility rules forthe Youth Allowance do tend to pick out themost financially disadvantaged groupamong students, but that the receipt ofYouth Allowance does not completely alle-viate the financial disadvantage of therecipients.

That there remains a residual measuredimpact of Youth Allowance receipt on thereported financial position of young people andrecipients’ experiences of financial hardshipsuggests that Youth Allowance is not operatingto equalise the financial experience of students.Nevertheless, these differences do not translateinto recipients having lower levels of life

satisfaction, in the way that these measures offinancial stress are associated with lower levelsof life satisfaction for young people in receipt ofother forms of government income support. Ingeneral, this finding does not support increasedbenefit payments, especially since the majorityof students can improve their financial positionby working part-time.

November 2013

Appendix 1: Fixed Effects Estimates

This appendix includes Tables A1 and A2,which contain fixed effects regression param-eters of equations explaining financial satisfac-tion indicators and financial stress indicators forthe Y98 cohort.

Table A1 Regression-Based Fixed Effects of Student Youth Allowance on Financial Satisfaction Indicators: Y98a

IndicatorMoney

each weekStandardof living

Lifeas a whole

Life satisfactionscale

Post-school youth allowance –0.029***b –0.005* 0.003 –0.004(0.008)c (0.003) (0.002) (0.010)

Living with kids 0.068*** –0.004 0.018*** 0.087***(0.014) (0.005) (0.004) (0.017)

Living with a partner 0.009 0.009*** 0.005** 0.041***(0.007) (0.003) (0.002) (0.008)

Living with parents 0.021*** 0.015*** –0.000 0.002(0.005) (0.002) (0.002) (0.007)

Part-time student 0.016 –0.008* 0.001 –0.009(0.011) (0.004) (0.003) (0.014)

Apprentice –0.113*** –0.007* –0.001 0.020*(0.009) (0.003) (0.003) (0.011)

Full-time job 0.056*** 0.006*** 0.002 0.005(0.005) (0.002) (0.002) (0.007)

Employed 0.163*** 0.009*** 0.007*** 0.032***(0.006) (0.002) (0.002) (0.008)

At university when surveyed 0.009 0.003 0.003 –0.008(0.006) (0.002) (0.002) (0.008)

Full-time vocational education and training study 0.002 0.005 0.012*** 0.044***(0.011) (0.004) (0.003) (0.014)

Other income support –0.022*** –0.012*** –0.009*** –0.041***(0.008) (0.003) (0.002) (0.010)

Buying a house 0.022** 0.009*** 0.003 –0.003(0.009) (0.004) (0.003) (0.011)

Observations 42,396 42,396 42,396 42,396Number of individuals 7,762 7,762 7,762 7,762R2 0.040 0.000 0.000 0.020

Notes: (a) All equations included year dummy variables. Estimates for 2002–09 inclusive.(b) *, ** and *** indicate significance at the 10, 5 and 1 per cent levels, respectively.(c) Standard errors are in parentheses.

�C 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

Ryan: Youth Allowance and the Financial Position of Young Australians 121

Page 8: Youth Allowance and the Financial Position of Young Australians

Endnotes

1. The project analysed the Y95 cohort, as well as the Y98cohort reported here. The results for both cohorts arequalitatively the same. The Y98 cohort in one sense ispreferable because the financial stress questions were askedfrom 2002 to 2009, a longer time span than the 2002–06span for the Y95 cohort. Results for the Y95 cohort arereported in Ryan (2013).

2. The changes targeting the independence criteria aredescribed at <http://www.centrelink.gov.au>.

3. Those aged 18 years or older receive just over $6,000 perannum, those living away from home over $9,200, withineligibility parental income thresholds of around $58,000and $68,000, respectively.

4. The weights also aim to take account of survey attritionfor waves after the initial contact. Other features of the dataare described in Ryan (2013).

5. The question is explicit that the borrowing should be ‘tolive on’. To avoid any potential response error, thoseindividuals in the process of purchasing their house areexcluded from this calculation.

6. Since the dependent variable is binary in a number ofcases, it may be more appropriate to use the conditionallogit model. Where this model was estimated for therelevant variables, the results were qualitatively similar tothose presented here.

7. Students on Youth Allowance, strictly speaking,face a different marginal tax rate compared to thosewho are not on Youth Allowance because of the YouthAllowance taper. However, students were allowed to earnup to $236 per fortnight in 2008 before any reduction inYouth Allowance. The results are qualitatively the same ifan interaction term between Youth Allowance and part-time work is included, so it seems quite reasonable totreat the Youth Allowance and part-time effects asadditive.

Table A2 Regression-Based Fixed Effects of Student Youth Allowance on Financial Stress Indicators: Y98a

Indicator

Asked familyor friendsfor money

Borrowedmoney justto live on

Could not buytextbooks orother studymaterials

Managingfinancially

Post-school youth allowance 0.028***b 0.029*** 0.068*** –0.071***(0.009)c (0.006) (0.005) (0.009)

Living with kids –0.046*** –0.046*** –0.045*** 0.014(0.015) (0.011) (0.009) (0.015)

Living with a partner –0.050*** –0.037*** –0.007* 0.031***(0.007) (0.005) (0.004) (0.007)

Living with parents –0.035*** –0.045*** –0.017*** 0.069***(0.006) (0.005) (0.003) (0.006)

Part-time student –0.043*** 0.006 –0.007 0.043***(0.012) (0.009) (0.007) (0.012)

Apprentice 0.034*** 0.040*** 0.019*** –0.083***(0.010) (0.007) (0.006) (0.010)

Full-time job –0.064*** –0.032*** –0.031*** 0.073***(0.006) (0.005) (0.003) (0.006)

Employed –0.026*** –0.016*** –0.004 0.085***(0.007) (0.005) (0.004) (0.007)

At university when surveyed 0.056*** 0.001 0.063*** –0.056***(0.007) (0.005) (0.004) (0.007)

Full-time vocational education and training study 0.046*** 0.019** 0.036*** –0.046***(0.012) (0.009) (0.007) (0.012)

Other income support 0.041*** 0.034*** 0.019*** –0.090***(0.009) (0.006) (0.005) (0.009)

Buying a house –0.019* –0.042*** –0.017*** –0.036***(0.010) (0.007) (0.006) (0.010)

Observations 42,396 42,396 42,396 42,396Number of individuals 7,762 7,762 7,762 7,762R2 0.030 0.010 0.020 0.040

Notes: (a) All equations included year dummy variables. Estimates for 2002–09 inclusive.(b) *, ** and *** indicate significance at the 10, 5 and 1 per cent levels, respectively.(c) Standard errors are in parentheses.

�C 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

122 The Australian Economic Review March 2014

Page 9: Youth Allowance and the Financial Position of Young Australians

8. The income variable is not always significant in allequations. For example, it is not significant in the ‘standardof living’, ‘life as a whole’ or life satisfaction equations ineither cohort.

References

Bexley, E., Daroesman, S., Arkoudis, S. andJames, R. 2013,University Student Financesin 2012: A Study of the Financial Circum-stances of Domestic and InternationalStudents in Australia’s Universities, Univer-sities Australia, Canberra.

Bradley, D. 2008, Review of Australian HigherEducation: Final Report, Department ofEducation, Employment and WorkplaceRelations, Canberra.

Centre for the Study of Higher Education 2008,Participation and Equity: A Review of theParticipation in Higher Education of Peoplefrom Low Socioeconomic Backgrounds andIndigenous People, CSHE, Melbourne.

Chapman, B. and Lounkaew, K. 2009, ‘Re-forming youth allowance: The “independent-at-home” category’, Economic Papers,vol. 28, pp. 304–9.

Curtis, D., Mlotkowski, P. and Lumsden,M. 2012, Bridging the Gap: Who Takes aGap Year and Why?, National Centrefor Vocational Education Research,Adelaide.

James, R., Bexley, E., Devlin, M. and Margin-son, S. 2007, Australian University StudentFinances 2006: Final Report of a NationalSurvey of Students in Public Universities,Universities Australia, Canberra.

Ribar, D. C. 2013, ‘Is leaving home ahardship?’, Melbourne Institute of AppliedEconomic and Social Research WorkingPaper no. 10/13, University of Melbourne.

Ryan, C. 2012, ‘Responses to financial stress atlife transition points’, Occasional Paper no.41, Australian Government Department ofFamilies, Housing, Community Services andIndigenous Affairs, Canberra.

Ryan, C. 2013, Student Income Supportand Education and Training Participationin Australia, Longitudinal Surveys ofAustralian Youth Research Report no. 62,National Centre for Vocational EducationResearch, Adelaide.

�C 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

Ryan: Youth Allowance and the Financial Position of Young Australians 123