Household Formation Over Time: Evidence from Two Cohorts of Young Adults

31 Pages Posted: 9 Nov 2015

See all articles by Daniel Cooper

Daniel Cooper

Federal Reserve Bank of Boston

María José Luengo‐Prado

Federal Reserve Banks - Federal Reserve Bank of Boston

Multiple version iconThere are 2 versions of this paper

Date Written: 2015-11-02

Abstract

Residential investment accounts for an important component of U.S. gross domestic product, and traditionally plays a strong role in business cycle expansions. U.S. residential investment has improved slowly during the recovery from the Great Recession, despite a relatively strong national rebound in house prices and record low interest rates. An important determinant of residential investment is the household formation rate, which is largely driven by young adults moving out of their parent's homes after completing high school or college. New household formation can be offset when existing households combine, typically through marriage or by moving in with parents or other relatives for economic reasons. This paper uses National Longitudinal Survey of Youth (NLSY) data from the 1979 and the 1997 cohorts to examine how various demographic, economic, and geographic factors influence the rate of household formation among young adults, both within cohorts and over time across cohorts.

JEL Classification: E24, J11, R21

Suggested Citation

Cooper, Daniel H. and Luengo-Prado, Maria Jose, Household Formation Over Time: Evidence from Two Cohorts of Young Adults (2015-11-02). Federal Reserve Bank of Boston Research Paper Series Current Policy Perspectives Paper No. 15-4, Available at SSRN: https://ssrn.com/abstract=2687394

Daniel H. Cooper (Contact Author)

Federal Reserve Bank of Boston ( email )

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617-973-4220 (Phone)

Maria Jose Luengo-Prado

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

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