Skip to main content

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.

Headlines

  • Custom Comparison Groups in the Integrated Postsecondary Education Data System

    Peter L. Hinrichs

    This Economic Commentary studies the behavior of colleges when they are asked to list a set of comparison group colleges in annual data reporting for the US Department of Education but are given little direction on how to do so. I find that, relative to themselves, colleges tend to list for comparison colleges that are more selective, are larger, and have better resources. One possible interpretation of these findings is that colleges overestimate where they stand relative to others, although an alternative interpretation is that colleges have accurate views but list comparison institutions based on aspirations. Read More

  • What Is Behind the Persistence of the Racial Wealth Gap?

    Dionissi Aliprantis Daniel R. Carroll

    Most studies of the persistent gap in wealth between whites and blacks have investigated the large gap in income earned by the two groups. Those studies generally concluded that the wealth gap was “too big” to be explained by differences in income. We study the issue using a different approach, capturing the dynamics of wealth accumulation over time. We find that the income gap is the primary driver behind the wealth gap and that it is large enough to explain the persistent difference in wealth accumulation. The key policy implication of our work is that policies designed to speed the closing of the racial wealth gap would do well to focus on closing the racial income gap. Read More

  • Why We All Should Care about Lead

    Treye Johnson

    Though the need to remediate lead seems to be a public health issue with a housing-based solution, the impacts of this crisis are far-reaching. Lead poisoning impacts all of us. The more people and organizations see themselves as part of the solution, the more likely we’ll find success. Read More

Upcoming EventsSEE ALL