Parental Income and Wealth Loss and Transfers to Their Young Adult Children
Julie Zissimopoulos (),
Johanna Thunell () and
Additional contact information
Julie Zissimopoulos: University of Southern California
Johanna Thunell: University of Southern California
Stipica Mudrazija: Urban Institute
Journal of Family and Economic Issues, 2020, vol. 41, issue 2, No 9, 316-331
Abstract As young people transition to adulthood, many rely on financial support from their parents to complete schooling and to live independently. Evidence suggests that there has been a gradual lengthening of the time young adults take to transition to adulthood. Young people attempting to move out of their parents’ home, complete college, or enter the workforce during the Great Recession faced uncertain economic times, increasing their need for financial support. At the same time, the income and wealth losses experienced by young adults’ parents may have disrupted transfers from them. We analyze the impact of large and unexpected declines in parents’ income and wealth during and immediately after the Great Recession on monetary transfers to their young adult children using data from the Panel Study of Income Dynamics (PSID) and the PSID Transition to Adulthood study. We find parents’ financial support of their young adult children declined during the Great Recession. The likelihood of receiving a transfer declined from 74% in 2005 to 57% in 2009. Parents’ loss of income was a factor in the amount of decrease but on average was relatively modest—a $10,000 parental income loss decreased transfers to their adult children by $109. However, parents experiencing large declines in income, those at the 75th and 95th percentile of income loss, reduced transfers to adult children by $1150 and $1700, respectively. Declines in parental transfers that reduce college completion rates, increase student loan debt and decrease likelihood of homeownership may have long term consequences for financial well-being.
Keywords: Financial assistance; Intergenerational transfers; Transition to adulthood (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s10834-019-09645-z Abstract (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:jfamec:v:41:y:2020:i:2:d:10.1007_s10834-019-09645-z
Ordering information: This journal article can be ordered from
http://www.springer. ... es/journal/10834/PS2
Access Statistics for this article
Journal of Family and Economic Issues is currently edited by Joyce Serido
More articles in Journal of Family and Economic Issues from Springer
Bibliographic data for series maintained by Sonal Shukla ().