Abstract
Objective: We study the role of employment deprivation and severe poverty at the household level on youth living arrangements in Spain in three different business cycle periods.
 Background: Previous evidence has shown that recessions in Southern European countries make young individuals turn to their families for financial protection. Most analyses assume that these cohabiting decisions are only related to the young individual's employment status while other household members’ employment deprivation is irrelevant.
 Method: We use information from the Quarterly Labour Force Survey between 2005 and 2017 and a very flexible indicator to measure the dimension of employment deprivation at the household level and estimate its role on the probability of being emancipated with a linear probability model. To avoid reverse causation, we also estimate two seemingly unrelated regressions of the probability of cohabiting with parents and the dimension of household employment deprivation.
 Results: Our results confirm that the Great Recession increased the probability of parental co-habitation, even if with some delay in relation to the business cycle. We reject the assumption about the irrelevance of other household member’s employment deprivation on youth cohabitation decisions because its dimension determines them.
 Conclusion: Policies aiming to improve emancipation should not only increase youth labour market opportunities but provide either more employment hours or more income transfers to those living in households where young individuals live.
Highlights
The Spanish youth labor market is one of the most precarious in the European Union (EU), with a large number of low-wage workers (Blázquez, 2008; OECD, 2017), and many fixed-term and undesired part-time contracts (García-Serrano & Malo, 2013; OECD, 2010)
Adding the recovery period in the analysis clarifies that the emancipation rate decreases with some delay in relation to the business cycle: it falls four percentage points in the recovery period compared with the bust, and three percentage points compared to the boom
The living arrangements pattern along the business cycle in Spain shows that even if a secular trend of delay in emancipation has occurred for several decades, once we control for individual labor market status and other household members’ employment deprivation, the recession years would have had a net positive impact on emancipation if unemployment and employment deprivation had not increased so much
Summary
The Spanish youth labor market is one of the most precarious in the European Union (EU), with a large number of low-wage workers (Blázquez, 2008; OECD, 2017), and many fixed-term and undesired part-time contracts (García-Serrano & Malo, 2013; OECD, 2010). Some studies have showed that during recessions there is a delay in emancipation and a return of part of the youth to the family nest to avoid poverty This effect has been documented for various European countries and for the United States (US) since 2008 (Ceballos-Santamaría & Villanueva, 2014; Fry, 2015; Matsudaira, 2016). Emancipation is delayed when young people live in households that can afford it She found that when young workers are employed, their salaries play key protective roles for other co-residing family members by significantly reducing the family’s poverty risk. We review the recent trends of working opportunities and employment conditions of young workers in the Spanish labor market, and we discuss the theory and evidence on the relationship between living arrangements, employment and household wellbeing.
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