Option to move in with parents is an asset

Greg Kaplan of the University of Pennsylvania has found that young adults who have the option to move back in with their parents after a job loss have an easier time finding the next good job. Apparently, being able to fall back on free room and board during tough times can be helpful. Who knew?

Kaplan goes into specifics (this research formed part of his Ph.D. dissertation). For example, it’s far more important for young people in poor families to be able to move back in with their parents. Not being able to live with parents after a job loss was about five times as devastating for kids from poor families as for it was for rich kids.

Living with one’s parents also leads to higher eventual earnings.  People who have a free place to live are less desperate to grab the first job offer they receive. They can often hold out for better paying jobs, or jobs that are more in line with their interests and training. Young adults who live with their parents also have more discretionary spending than those who don’t, especially after a job loss. Thus, the economy at large benefits when parents allow their grown children to live with them.

So, to summarize, during tough economic times, have parents who will let you live with them.  It seems that both parents and kids are getting this message. In Kaplan’s sample, 40% of twenty-two year olds who had moved out returned to their parent’s house for at least a month. This is corroborated by a recent Pew survey.

As someone who graduated at a time when young people had every expectation of being able to leave home forever after college, this makes me sad. I think it’s good for parents to be aware that welcoming their grown children back home can be enormously helpful for the kids both in the short and long term. However, I wish fewer young adults had to rely on that option.