Abstract
In this paper we document the behavior of emancipation over one of the biggest boom–bust cycles experienced by the Spanish economy. In principle, the economic difficulties faced by the Spanish youth during the last recession would have hampered a normal emancipation pace. However, we find that the proportion living away from parents among those aged 18–40 has not decreased but increased from 44 % during the boom (2005–2008) to 46 % during the bust (2009–2013). A simple decomposition reveals that this is mainly driven by the substantial rise in the emancipation rate among the full-time employed workers during the bust. To explain this change we discuss several factors such as macroeconomic conditions, rental subsidy policy, higher labor mobility, selection bias, reverse causation, time-lag in adjustment and secular trend.
Highlights
Establishing own home away from the parental home is one of the most important transitions one undertakes along the life course and is often considered as the beginning of a true adult life
Has been falling continuously since. It has fallen more than 30% during the last 6 years according to the housing price index of the Spanish National Institute of Statistics (INE)
Instead of modeling the decision of working and studying jointly with the living arrangement decision as in Martinez-Granado and Ruiz-Castillo (2002) or Giannelli and Monfardini (2003), we focus on the effect of detailed job characteristics and labor market situation on emancipation during the recession and we find substantial differences
Summary
Establishing own home away from the parental home is one of the most important transitions one undertakes along the life course and is often considered as the beginning of a true adult life. We have to consider the costs/benefits from both children’s and parents’ side as the decision of emancipation often involves a process of negotiation between them. Given the parents’ economic capacity, in turn, children in smaller-size families would be tolerated longer than those in larger families. This may be relevant in Spain as the fertility rate declined considerably during the period the cohorts of our analysis were born.. Knowing the emancipation pattern and its evolution is important to acquire better understanding about a wide variety of demographic and socio-economic conditions of a society and to predict their prospects in the future, such as family formation, fertility, age structure, housing demand, consumption and labor supply.. The main contribution of our paper is the detection of a surprising counterintuitive evolution of emancipation in Spain during the last economic cycle, the finding of a dominant behavioral effect and the attempt to explain this from diverse perspectives such as mobility, selection, reverse causation, time-lag and secular trend
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