A Matching Model of Co-Residence with a Family Network: Empirical Evidence from China

Abstract

We develop a co-residence model between young adults and the elderly as an application of the Shapley-Shubik-Becker bilateral matching framework. This model captures competition between adult children and between parents and parents-in-law. Using micro data from China, we estimate our model by using a network simulation method to fill in partially unobservable marriage links. We find that our model explains the child-side and parent-side competitions observed in the data better than two alternative multinomial logit models with only one-side competition. In addition, counterfactual experiments quantify the effects of changes in the one-child policy and housing prices on intergenerational co-residence.

Boomerang College Kids: Unemployment, Job Mismatch and Coresidence

“…Moreover, a growing literature using European data (Manacorda and Moretti, 2006;Giuliano et al, 2004), Asian data (Sakudo, 2007), and American data (Kaplan, 2012) finds that preferences play an important role in determining coresidence behaviors. Marriage formation (White, 1994;Sakudo, 2007;Yu and Kuo, 2016), housing costs (Ermisch, 1999;Guo et al, 2019;Rosenzweig and Zhang, 2019) and public benefits (Hoerger et al, 1996;Hu, 2001) also affect young people's living arrangement with parents.…”