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

50 Pages Posted: 3 Mar 2012

See all articles by Deborah A. Cobb-Clark

Deborah A. Cobb-Clark

School of Economics, University of Sydney; IZA Institute of Labor Economics

Tue Gørgens

Australian National University (ANU) - Research School of Economics (RSE)

Abstract

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 co-residence 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.

Keywords: co-residence, financial transfers, socioeconomic disadvantage, youth outcomes

JEL Classification: J12, J13, J22, J24

Suggested Citation

Cobb-Clark, Deborah A. and Gorgens, Tue, Parents' Economic Support of Young-Adult Children: Do Socioeconomic Circumstances Matter?. IZA Discussion Paper No. 6376. Available at SSRN: https://ssrn.com/abstract=2015192

Deborah A. Cobb-Clark (Contact Author)

School of Economics, University of Sydney ( email )

606 Social Sciences Bldg. (A02)
The University of Sydney
Sydney, NSW 2006
Australia
61435061387 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tue Gorgens

Australian National University (ANU) - Research School of Economics (RSE) ( email )

Canberra, Australian Capital Territory 0200
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
14
Abstract Views
308
PlumX Metrics