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Parental Proximity and Earnings after Job Displacements

11.29.17

Young adults, ages 25 to 35, who live in the same neighborhoods as their parents experience stronger earnings recoveries after a job displacement than those who live farther away. This result is driven by smaller on-impact wage reductions and sharper recoveries in both hours and wages. We show that geographic mobility, different job search durations, housing transfers, and ex-ante differences between individuals are unlikely explanations. Our findings are consistent with a framework in which some individuals living near their parents face a better wage-offer distribution, though we find no direct evidence of parental network effects.

Keywords: Parents, adult children, job loss, neighborhood, transfers, networks.
JEL codes: J61, J64, R23.

Suggested citation: Coate, Patrick, Pawel Krolikowski, and Mike Zabek, 2017. “Parental Proximity and Earnings after Job Displacements.” Federal Reserve Bank of Cleveland, Working Paper no. 17-22. https://doi.org/10.26509/frbc-wp-201722.

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