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Parents' Economic Support of Young-Adult Children: Do Socioeconomic Circumstances Matter?

  • Deborah Cobb-Clark

    ()

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; and Institute for the Study of Labor (IZA))

  • Tue Gørgens

    (Research School of Economics, The Australian National University)

This paper assesses how the economic support provided by parents to young adults as they complete their education and enter the labor market is related to the family’s socioeconomic circumstances. We address this issue using detailed survey data on intergenerational coresidence and financial transfers merged with nearly a decade of administrative data on the family’s welfare receipt while the young person was growing up. We find that young people who experience socioeconomic disadvantage are more likely to be residentially and financially independent of their parents than are their peers growing up in more advantaged circumstances. This disparity is larger for financial transfers than for co-residence and increases as young people age. Moreover, there is a clear link between parental support and a young person’s engagement in study and work which is generally stronger at age 20 than at age 18 and is often stronger for advantaged than for disadvantaged youths. We find no evidence, however, that a lack of parental support explains the socioeconomic gradient in either studying or employment.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2012n04.

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Length: 50 pages
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:iae:iaewps:wp2012n04
Contact details of provider: Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
Phone: +61 3 8344 2100
Fax: +61 3 8344 2111
Web page: http://www.melbourneinstitute.com/
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