Abstract
What makes adult children live with their parents? This paper examines the extent to which individual and family characteristics are associated with co-residence decisions between adult children and their parents. Using Mexico’s 2011 Social Mobility Survey (EMOVI) retrospective data and focusing on the young adult population in Mexico, we test empirically what parent and adult children characteristics correlate with co-residence status. Marginal effects from a probit regression model show that, after controlling for individual characteristics and retrospective family conditions, adult children’s education and employment status seem to be correlated with co-residence status, although only for males. Marital status, whether or not they have children, and retrospective parents’ home ownership are all correlated with co-residence status. The probability of adult male children staying at their parents’ home is reduced when the father has higher levels of education, while increased when the mother has higher levels of education.
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Notes
In practical terms, parents’ budget might not be sufficient to provide this type of assistance to all children.
This type of information might suffer from recollection bias or the failure to remember, which can be a serious concern.
However, current income does not necessarily predict potential earnings. Researchers typically model the relationship between predicted wages and living arrangements (Cobb-Clark, 2008).
The opposite can also be modeled: we can assume that the parent derives some utility from cohabiting with the child, but the child values independence and derives a disutility from cohabiting with the parent. The only requirement is that one individual prefers to live together and the other prefers to live separately.
The expenditure system conforms to certain conditions. The first condition is an additively separable function of the form U(x1,x2, …, xn) that can be represented, after a monotonic transformation, as the sum of a set of partial utility functions. Hence, the sum of expenditures of individual goods must equal the total expenditure. The second condition is homogeneity in prices and total expenditure: the sum of income and price elasticities equals zero (Chung, 1994). The third condition is regularity, which implies quasi-concavity of the utility function (Chang & Fawson, 1994).
A full description of EMOVI 2011, its survey design, and its methodology, can be found at https://ceey.org.mx/contenido/que-hacemos/emovi/.
As noted, marital status is highly correlated with co-residence status, and these might be endogenous to each other- e.g., some young adults might leave the parental home to get married and some might even get married to leave the parental home. This issue would be hard to address in a single equation framework of co-residence status, given the absence of a good instrument to address the endogeneity concerns.
The Housing Price Index reports purchase prices instead of rental prices. A rental/leasing price index would be preferable because it seems more likely that, to gain independence, adult children would rent houses or apartments before buying one. Although purchase prices and rental prices should be highly correlated, purchase prices won’t be as accurate as rental prices to proxy for the costs of living independently. For more details see: https://www.gob.mx/shf/documentos/indice-shf-de-precios-de-la-vivienda-en-mexico-2019.
Own estimations with data from EMOVI 2011.
Originally we included a variable indicating parents’ indigenous background. It did not result statistically significant in any regression and all other results are consistent with the omission of such variable. Parents with indigenous background represent 11% of the sample.
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Adelaido García-Andrés received research support from the Graduate Research Fellowship Program sponsored by ESRU Foundation and the Espinosa Yglesias Research Center (Centro de Estudios Espinosa Yglesias, CEEY).
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García-Andrés, A., Martinez, J.N. & Aguayo-Téllez, E. Leaving the Nest or Living with Parents: Evidence from Mexico’s Young Adult Population. Rev Econ Household 19, 913–933 (2021). https://doi.org/10.1007/s11150-021-09553-y
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DOI: https://doi.org/10.1007/s11150-021-09553-y