How Economic Development Shapes Household Structure and the Age of Leaving Home and Household Formation: Evidence from 67 Countriess Big Microdataa

Abstract

The question of whether household structure converges with economic growth and urbanization. The question of whether household structure converges with economic growth and urbanization has been long discussed, but comparative empirical evidence is scant. This paper takes advantage of newly available ‘big microdata’ to evaluate the relationship between economic growth, urbanization, household structure, the age at which individuals leave their parents’ home, and the age at which they form their own household, for almost 70 countries at multiple points in time. To do this, I adapt two measures from demographic research on marriage; the indirect median age and the singulate mean age. I then run cross-section and time series models to examine the correlation to GDP per capita and the urbanization rate. Some findings confirm conventional hypotheses; there is a nearly linear relationship between GDP per capita, the headship rate, share of households that consist of one person, and the share of households made up an extended family. However, the relationship between economic development and the age of leaving home and household formation is not linear; rather, it is a negative quadratic. People leave home and form their own household latest in middle-income countries. Two proposed explanations for this are increasing returns to human capital and changes in the relative cost of housing.