Abstract
As the number of households with adult children living with their parents increases, it is important to understand the financial dynamics in these households. This study uses pooled data from the Survey of Income and Program Participation to examine changes in three measures of financial dependency of coresident adult children between 1989 and 2009, with a focus on changes during economic recessions and across race and ethnic groups. Financial dependency is measured using information on individual income and rental contributions to capture three dimensions of dependency: absolute income, relative income, and rental dependency. Financial dependency of coresidential adult children has been relatively stable over time, though there is a modest decrease during an economic recession. Black and Hispanic young adults are less likely than Whites to be financially dependent on their parents, potentially contributing to the intergenerational transmission of racial disparities in wealth accumulation with some young adults having an extended safety net and others needing to pool resources with parents.
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Notes
In SIPP, a college student living on campus with a room held at home is still a household member at the sample address. Unfortunately, it is not possible to distinguish college students temporarily at school from other SIPP respondents. For this reason, sensitivity tests are conducted, restricting the sample to only young adults not enrolled full-time in school. Findings are consistent across both samples; results available upon request.
Not all years of the recession are available in the data. Information on recessions come from NBER, which classifies a recession as a significant economic decline lasting more than 6 months (https://nber.org/cycles/cyclesmain.html).
About 2% of households report not paying for rent or utilities; these households are excluded. Less than 2% of remaining households reside in public housing or receive government-subsidized rent. Sensitivity tests that exclude those receiving household support suggest that the results are robust to the inclusion of these respondents.
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Funding
This research was supported in part by an NIA training grant to the Population Studies Center at the University of Michigan (T32AG000221) and the Center for Aging and Policy Studies, funded by the National Institutes of Health NIA Center Grant P30AG066583.
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Appendix A: Overlap of dependency variables (N = 80, 268)
Appendix A: Overlap of dependency variables (N = 80, 268)
Rental dependency | No rental dependency | |||
|---|---|---|---|---|
Absolute dependency | No absolute dependency | Absolute dependency | No absolute dependency | |
Relative dependency | 38.8% | 19.4% | 0.5% | 0.5% |
No relative dependency | 19.1% | 18.4% | 0.9% | 2.5% |
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Reyes, A.M. Race and Ethnic Differences in Financial Dependency of Coresident Young Adults During Economic Recessions and Over Time. J Fam Econ Iss 43, 51–65 (2022). https://doi.org/10.1007/s10834-021-09762-8
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DOI: https://doi.org/10.1007/s10834-021-09762-8