Who uses RESPs and Why Kevin Milligan ~ Vancouver School of Economics ~ University of British Columbia

Who uses RESPs and Why

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In Charles M. Beach, Robin W. Boadway and R. Marvin McInnis (eds.) Higher Education in Canada, pp. 467-494. McGill-Queen's University Press, 2005: Publisher Site.


This paper presents evidence on participation in tax-preferred Registered Education Savings Plans, finding that participation is concentrated in high-income, high-wealth, and high-education families. This runs contrary to the programme's stated redistributionary goal. I explore several possible explanations for the finding, uncovering evidence that parental expectations of their children's education attainment and the fixed costs of learning about and setting up an account are important factors in understanding the low participation of low-income families. Finally, I propose that instituting a one-time 'bonus' for opening an account and simplifying the tax structure of the RESP would make the accounts more effective.

UBC Discussion Paper 04-03, March 2004: PDF.

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