Young Adults Living with Their Parents and the Influence of Peers

41 Pages Posted: 8 Aug 2016

See all articles by Effrosyni Adamopoulou

Effrosyni Adamopoulou

University of Mannheim and IZA

Ezgi Kaya

Cardiff University - Cardiff Business School; Global Labor Organization (GLO)

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Abstract

This paper studies the impact of peer behavior on living arrangements of young adults in the U.S. Using data from the National Longitudinal Study of Adolescent Health (Add Health) we analyze the influence of high school friends on the nest-leaving decision of young adults. We achieve identification by exploiting the differences in the timing of leaving the parental home among peers, the individual-specific nature of the peer groups that are based on friendship nominations, and by including school (network) and grade (cohort) fixed effects.Our results indicate that there are statistically significant peer effects on the decision of young adults to leave parental home. This is true even after we control for labor and housing market conditions and for a comprehensive list of individual and family-of-origin characteristics that are usually unobserved by the econometrician. We discuss various mechanisms and we confirm the robustness of our results through a placebo exercise. Our findings reconcile with the increasing fraction of young adults living with their parents that is persisting in the U.S. even after the end of the Great Recession.

Keywords: peer effects, friends, living arrangements, leaving parental home

JEL Classification: D10, J12, J60, Z13

Suggested Citation

Adamopoulou, Effrosyni and Kaya, Ezgi, Young Adults Living with Their Parents and the Influence of Peers. IZA Discussion Paper No. 10070, Available at SSRN: https://ssrn.com/abstract=2819351 or http://dx.doi.org/10.2139/ssrn.2819351

Effrosyni Adamopoulou (Contact Author)

University of Mannheim and IZA ( email )

L7, 3-5
Mannheim
Germany

Ezgi Kaya

Cardiff University - Cardiff Business School ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom

Global Labor Organization (GLO) ( email )

Collogne
Germany

HOME PAGE: http://https://glabor.org/user/kayaez/

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