‘Mom, Dad: I’m Staying’ Initial Labor Market Conditions, Housing Markets, and Welfare

Mazza, Rodrigo Martínez

doi:10.2139/ssrn.3785901

Cited by 1 publication

(2 citation statements)

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“…We show that affordability is a leading contributing factor—both before and during the Covid pandemic—to the increase in coresidency, while contribution by unemployment comes mostly from the Covid period. As the unemployment rate goes from 4.4% in 2019 to 6.4% in 2021, coresidence share increases similarly to what has been observed in previous economic recessions in the United States (Paciorek, 2016) and Europe (Martinez‐Mazza, 2020).…”

Section: Resultssupporting

confidence: 73%

“…The trend of a higher share of coresidency following the Great Recession is also found across high-income economies in Europe and Asia (Forrest & Yip, 2012;Lennartz et al, 2016;Martinez-Mazza, 2020). Using data for 25 European countries over the period from 1994 to 2018, Martinez-Mazza (2020) finds that a 1-percentage-point increase in the unemployment rate at the time of graduation increases the probability of living with parents by 1.5 percentage points but attributes part of that rise to "rigid" rental markets resulting in a larger impact of negative income shocks.…”

Section: Literature Reviewmentioning

confidence: 87%

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Why do young adults coreside with their parents?

Acolin,

Lin,

Wachter

2023

Real Estate Economics

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Nearly one in every two adults aged 18–29 currently lives with their parents, compared to slightly more than one in four in 1960. The literature focuses on changing labor market conditions and marriage–childbearing delays to account for this shift. Using a Blinder–Oaxaca procedure, we identify a role for housing affordability, measured by market‐level median housing rent or price to median household income ratios, as an additional factor in the increase in coresidency since but not before 2000. We endogenize the marriage–childbearing decision with a Heckman selection model and attribute up to a quarter of the observed 9‐percentage‐point increase in the coresidence share between 2000 and 2021 to a decrease in housing affordability. We find a nonlinear relationship between affordability and coresidence with the relationship strongest in the least affordable metros where affordability constraints might be more binding. Overall, these results show changes in market‐level housing affordability are associated with the increase in young adult coresidence over the first two decades of the 21st century.

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Section: Resultssupporting

confidence: 73%

Section: Literature Reviewmentioning

confidence: 87%