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Working Paper

Parental Proximity and Earnings after Job Displacements

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.
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Topics
Financial well-being
11.29.2017ISSN 2573-7953 WP 17-22DOI 10.26509/frbc-wp-201722
Keywords parents, adult children, job loss, neighborhood, transfers, networks
JEL Classification Codes J61, J64, R23

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Coate, Patrick, Pawel M. 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