Intergenerational Transfers and Household Structure. Why Do Most Italian Youths Live With Their Parents?
Abstract85 percent of Italian men aged 18-33 live with their parents. We argue that Italian parents like to live with their children and a rise in their income makes it possible for them to offer their children higher consumption in exchange for their presence at home. Children prefer to live on their own but are willing to exchange some independence for extra consumption. We formalize this intuition with a bargaining model between parents and children. We test the predictions of the model by estimating the effect of parental income on the probability that children live with their parents. The key econometric issue is the endogeneity of parental income. In order to identify the causal effect of parental income on children's living arrangements we use changes in parents' retirement age induced by the 1992 reform of the Italian social security as an instrument for parental income. By raising retirement age, this reform forced some fathers to remain in the labor market longer than the cohort immediately preceding them, therefore raising their income. Our instrumental variable estimates indicate that a rise in parents' income significantly raises the children's propensity to live at home: a $500 increase in annual parental income results in a 3 to 3.5 percentage point rise in the proportion of children living with their parents.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0536.
Date of creation: Jun 2002
Date of revision:
Contact details of provider:
Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
Family structure; Living Arrangements; Two-Sample IV;
Find related papers by JEL classification:
- J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Deaton, Angus S & Ruiz-Castillo, Javier & Thomas, Duncan, 1989. "The Influence of Household Composition on Household Expenditure Patterns: Theory and Spanish Evidence," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 179-200, February.
- Sue Fernie & Helen Gray, 2002.
"It's a family affair: the effect of union recognition and human resource management on the provision of equal opportunities in the UK,"
LSE Research Online Documents on Economics
20089, London School of Economics and Political Science, LSE Library.
- Sue Fernie & Helen Gray, 2002. "Its a Family Affair: the Effect of Union Recognition and Human Resource Management on the Provision of Equal Opportunities in the UK," CEP Discussion Papers dp0525, Centre for Economic Performance, LSE.
- GALASSO, Vincenzo & PROFETA, Paola, 2003.
"Lessons for an aging society: the political sustainability of social security systems,"
CORE Discussion Papers
2003077, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Vincenzo Galasso & Paola Profeta, 2004. "Lessons for an ageing society: the political sustainability of social security systems," Economic Policy, CEPR & CES & MSH, vol. 19(38), pages 63-115, 04.
- Vincenzo Galasso & Paola Profeta, 2003. "Lessons for an Aging Society: The Political Sustainability of Social Security Systems," Working Papers 244, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Vincenzo Galasso & Paola Profeta, 2004. "Lessons for an Aging Society: The Political Sustainability of Social Security Systems," Working Papers, Center for Retirement Research at Boston College wp2004-7, Center for Retirement Research.
- Giuliano, Paola, 2006.
"Living Arrangements in Western Europe: Does Cultural Origin Matter?,"
IZA Discussion Papers
2042, Institute for the Study of Labor (IZA).
- Paola Giuliano, 2007. "Living Arrangements in Western Europe: Does Cultural Origin Matter?," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 927-952, 09.
- Paola Giuliano, 2005. "Living Arrangements in Western Europe: Does Cultural Origin Matter?," 2005 Meeting Papers 189, Society for Economic Dynamics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.