Migration Choices of the Boomerang Generation: Does Returning Home Dampen Labor Market Adjustment?

Abstract

This paper documents how the decisions of young adults to return to live with their parents (‘boomerang’) may contribute to low or declining levels of out-migration from weak labor markets. Using the Panel Study of Income Dynamics and a locational choice model, we find that the likelihood of a non-boomerang location being chosen by a young adult increases with local wages, while wages have a much smaller effect on selecting the boomerang option. In addition, the likelihood that a boomerang location is selected actually increases with the location’s unemployment rate. The lower sensitivity of boomerang moves to positive labor market features is substantive in magnitude and is highest for those without a college degree and for non-whites. We document two distinct ways in which boomerang moves dampen labor market adjustments. Among young adults living in the same labor market as their parent, simulated negative labor market shocks in the form of increases in unemployment accompanied by decreases in wages result in a greater increase in boomeranging than leaving the labor market, hence a residential rather than labor market adjustment. Among young adults living in a different labor market than their parents, boomerang moves are more likely to result in worse destination labor markets than are non-boomerang moves, though a large share of both types of moves is to weaker labor markets.