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Young Adults Living with Their Parents and the Influence of Peers

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  • Adamopoulou, Effrosyni

    (ZEW Mannheim)

  • Kaya, Ezgi

    (Cardiff University)

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.

Suggested Citation

  • Adamopoulou, Effrosyni & Kaya, Ezgi, 2016. "Young Adults Living with Their Parents and the Influence of Peers," IZA Discussion Papers 10070, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10070
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    5. Agnieszka Sompolska-Rzechuła & Agnieszka Kurdyś-Kujawska, 2022. "Generation of Young Adults Living with Their Parents in European Union Countries," Sustainability, MDPI, vol. 14(7), pages 1-27, April.
    6. Concetta Rondinelli & Roberta Zizza, 2020. "Spend today or spend tomorrow? The role of inflation expectations in consumer behaviour," Temi di discussione (Economic working papers) 1276, Bank of Italy, Economic Research and International Relations Area.
    7. Patacchini, Eleonora & Arduini, Tiziano, 2016. "Residential choices of young Americans," Journal of Housing Economics, Elsevier, vol. 34(C), pages 69-81.
    8. Adamopoulou, Effrosyni, 2016. "Living Arrangements of the Youth: Determinants and Gender Differences/Patrones de convivencia de los jóvenes: Determinantes y diferencias por sexos," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 34, pages 35-44, Enero.
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    More about this item

    Keywords

    peer effects; friends; living arrangements; leaving parental home;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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