Parental Proximity and Earnings after Job Displacements

Abstract

Young adults, ages 25 to 35, who live in the same neighborhoods as their parents experience stronger earnings recoveries after a job displacement than those who live farther away. This result is driven by smaller on-impact wage reductions and sharper recoveries in both hours and wages. We show that geographic mobility, different job search durations, housing transfers, and ex-ante differences between individuals are unlikely explanations. Our fi ndings are consistent with a framework in which some individuals living near their parents face a better wage-offer distribution, though we fi nd no direct evidence of parental network effects.

Spatial Distance Between Parents and Adult Children in the United States

“…Proximity is also associated with health care utilization and labor market outcomes. Having an adult child living nearby reduces nursing home entry and the use of formal care following a decline in health (H. Choi, Schoeni, Langa, & Heisler, ), and having parents living nearby improves labor market outcomes for both men and women (Coate, ; Coate, Krolikowski, & Zabek, ; Compton & Pollak, ). Finally, migration decisions are also influenced by the location of relatives (Dawkins, ; Longino, Bradley, Stoller, & Haas, ; Massey & Espinosa, ; Spilimbergo & Ubeda, ; Spring, Ackert, Crowder, & South, ; Zorlu, ).…”