Economic Incentives for Financial and Residential Independence

In this paper we examine the impact of the resources of children and of their parents on the children's transition to residential and financial independence. Previous studies of this transition focused primarily on the impact of family structure and parent-child relationships on the decision to...

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Bibliographic Details
Published in:Demography 1996-02, Vol.33 (1), p.82-97
Main Authors: Whittington, Leslie A., Peters, H. Elizabeth
Format: Article
Language:English
Subjects:
Activities of Daily Living - psychology
Adolescent
Adolescents
Adult
Age
Aid to Families with Dependent Children - economics
Children
Children & youth
Costs
Demography
Economic incentives
Families & family life
Family - psychology
Family and Household
Family structure
Female
Homes
Humans
Income
Income Tax - economics
Income taxes
Independence
Indexing in process
Living arrangements
Male
Motivation
Parent-child relations
Parents
Parents & parenting
Privacy
Probability
Proportional Hazards Models
Public assistance programs
Rental income
Socioeconomic Factors
State income tax
Tax exemptions
Transition
Unemployment rates
United States
USA
Willingness to pay
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Summary:In this paper we examine the impact of the resources of children and of their parents on the children's transition to residential and financial independence. Previous studies of this transition focused primarily on the impact of family structure and parent-child relationships on the decision to leave home, but much less is known about the role of economic factors in the transition to independence. Using data from the Panel Study of Income Dynamics (PSID) for the period 1968-1988, we estimate discrete-hazard models of the probability of achieving residential and financial independence. We find that the child's wage opportunities and the parents' income are important determinants of establishing independence. The effect of parental income changes with the child's age. We also find some evidence that federal tax policy influences the decision to become independent, although the magnitude of this effect is quite small.
ISSN:0070-3370
1533-7790
DOI:10.2307/2061715