Tuition, Jobs, or Housing: What's Keeping Millennials at Home?
Previous title: "Debt, Jobs, or Housing: What’s Keeping Millennials at Home?"
Revised July 2017
JEL classification: D14, E24, R21
Donghoon Lee, and
Wilbert van der Klaauw
This paper documents marked changes in young Americans’ residence choices over the past fifteen years, with recent cohorts decreasingly living with roommates and instead 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. In regions where many students are exposed to college costs, we find that
increased tuition is associated with more coresidence with parents and less living with roommates. Where fewer youth confront college tuition, however, local job market conditions are paramount in shaping the decision of whether to live with parents.