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Why do Most Italian Youths Live with Their Parents? Intergenerational Transfers and Household Structure

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Author Info
Marco Manacorda
Enrico Moretti

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Abstract

More than 80% of Italian men aged 18–30 live with their parents.We argue that one contributing factor to this remarkably high rate of cohabitation is parents' tastes for coresidence. In order to investigate the role of parental preferences, we estimate the effect of exogenous changes in parental income on rates of cohabitation in Italy using Survey of Households' Income and Wealth (SHIW) micro data from 1989 to 2000. In order to identify a source of exogenous variation in parental income, we use changes in fathers' retirement age induced by the 1992 reform of the Italian Social Security system as an instrumental variable for parental income. By raising retirement age, this reform forced some fathers to remain in the labor market longer than they would have otherwise, therefore raising their disposable income. We use a two-sample instrumental variable (TSIV) strategy. Our TSIV estimates indicate that a rise in parents' income significantly raises the children's propensity to live at home: A 10% increase in annual parental income results in approximately a 10% rise in the proportion of men living with their parents. Although we cannot definitely rule out alternative interpretations, these results are consistent with our hypothesis that cohabitation is a normal good for Italian parents. (JEL: J120, J610, H550) Copyright (c) 2006 by the European Economic Association.

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Article provided by MIT Press in its journal Journal of the European Economic Association.

Volume (Year): 4 (2006)
Issue (Month): 4 (06)
Pages: 800-829
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Handle: RePEc:tpr:jeurec:v:4:y:2006:i:4:p:800-829

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  1. Erich Battistin & Agar Brugiavini & Enrico Rettore & Guglielmo Weber, 2008. "The retirement consumption puzzle: evidence from a regression discontinuity approach," IFS Working Papers W08/05, Institute for Fiscal Studies. [Downloadable!]
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  2. Francesco C. Billari & Guido Tabellini, 2008. "Italians are Late: Does it Matter?," NBER Chapters, in: Demography and the Economy National Bureau of Economic Research, Inc. [Downloadable!]
  3. Rob Alessie & Agar Brugiavini & Guglielmo Weber, 2005. "Saving and Cohabitation: The Economic Consequences of Living with One's Parents in Italy and the Netherlands," NBER Working Papers 11079, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Sascha O. Becker & Samuel Bentolila & Ana Fernandes & Andrea Ichino, 2005. "Job Insecurity and Youth Emancipation: A Theoretical Approach," IZA Discussion Papers 1869, Institute for the Study of Labor (IZA). [Downloadable!]
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  5. Alessandro Balestrino & Cinzia Ciardi, 2007. "Social Norms, Cognitive Dissonance and the Timing of Marriage," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  6. Becker, Sascha & Bentolila, Samuel & Fernandes, Ana & Ichino, Andrea, 2004. "Job Insecurity and Children's Emancipation," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  7. Mendez, Ildefonso, 2008. "The Role of Partnership Status and Expectations on the Emancipation Behaviour of Spanish Graduates," MPRA Paper 8655, University Library of Munich, Germany. [Downloadable!]
  8. Francesco C.Billari & Vincenzo Galasso, 2008. "What Explains fertility? Evidence from Italian pension reforms," Working Papers 343, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
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  9. Sascha O. Becker & Samuel Bentolila & Ana Fernandes & Andrea Ichino, 2005. "Youth Emancipation and Perceived Job Insecurity of Parents and Children," IZA Discussion Papers 1836, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Kazuyasu Sakamoto, 2007. "Familial Support for Unemployed Youth," Hi-Stat Discussion Paper Series d06-201, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
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  12. Tomáš Sobotka & Laurent Toulemon, 2008. "Overview Chapter 4: Changing family and partnership behaviour," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 19(6), pages 85-138, July. [Downloadable!]
  13. repec:bep:eapcon:v:7:y:2007:i:2:p:1794-1794 is not listed on IDEAS
  14. Ingela Alger & Jörgen Weibull, 2008. "The fetters of the sib: Weber meets Darwin," Working Papers hal-00354241_v1, HAL. [Downloadable!]
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