Debt, Jobs, or Housing: What's Keeping Millennials at Home?
Revised: September 2015
JEL classification: D14, E24, R21
This paper documents marked changes in young Americans’ residence choices over the past fifteen years, with recent cohorts delaying homeownership and lingering much longer in parents’ households. To understand the sources and implications of this decline in independence, we estimate the contributions of local economic circumstances to the decision to live with parents or independently. Transition models, local aggregates, and state-cohort tuition patterns are used to address the likely presence of individual- and neighborhood-level unobserved heterogeneity. Employment and housing market estimates imply countervailing influences of local economic growth on co-residence. Increasing college costs, however, unambiguously favor co-residence with parents.