Geographic Mobility and Parental Co-residence Among Young Adults

This paper connects two empirical trends: (i) the decline in geographic mobility and responsiveness to labor demand shocks, even among young adults who have historically been the most mobile, and (ii) the increased share of young adults co-residing with parents. Using data on young adults aged 18 to 35 from the American Community Survey and the Panel Study of Income Dynamics, we examine three outcomes: parental coresidence, transitioning out from living with a parent, and “boomerangs” - returning to live with a parent after living elsewhere. Our results demonstrate the importance of the parental coresidence option in understanding the location decisions of young adults. In particular, we find evidence that boomerang decisions may be insensitive to the labor market conditions that come with returning to the parents’ home, hence boomerang moves are more likely to result in residing in a labor market with higher unemployment rates. This raises some concerns for the future labor market prospects of young adults, particularly Hispanic young adults aged 18 to 23 years old and black young adults of any age, whose boomerang moves showed the greatest likelihood of being towards weaker labor markets.