D 8.4 - The role of parental material resources in adulthood transitions

While transition from adolescence to independent adulthood has become longer and more fragemented in advanced societies, family ties persist after residential emancipation of young people and often take the form of reciprocal intergenerational transfer of goods and services between parents and children. This report investigated the role of the family of origin in adulthood transition by focusing on monetary transfers flowing from parents towards children. Specifically, we examined three distinct aspects of this role: (i) intra-household sharing of resources, (ii) regular inter-household monetary transfers and (iii) poverty outcomes of independent living. We addressed the following questions. (i) What is the extent to which young adults pool their incomes with other household members or keep incomes separately? Four hypotheses regarding determinants of financial arrangements in co-residential households of young adults’ contribution to the household budget are tested. (ii) Who are the young people with higher likelihood to receive regular cash transfer? Is it those in higher need (non-employed) or stemming from higher social class? Four scenarios are tested by considering jointly the effects of class of origin and occupational status. (iii) What are the dynamics and patterns of youth poverty across member states? How living arrangements between the young and their parents, gender differences and labour market status shape these patterns? Our analyses are based on cross-sectional EU-SILC data, including specific modules on the intra- household share of resources from 2010 and the intergenerational transmission of poverty from 2005 and 2011. The analysis on intra-hoseuhold sharing of financial resources studied determinants (the role of household income, needs of household members and relative income of young adults) of contributions of young adults to the household budget ad ability to decide over personal expenses. Further, we also tried to quantify the effect of taking into account intra-household income sharing on the measurement of the income situation of young adults. Results about determinants of contribution to the household budget and ability to decide about personal expenses broadly confirmed our hypotheses about the effect of household income, relative income of household members and household members’ needs. In households with higher income, young adults contribute less to the household budget and are more able to decide about their personal expenses. The unemployed and students contribute less and have lower ability to decide over personal expenses. Contrary to the expectations, those having a child in the household often pay higher contribution to household expenses. Relative income of young adults also influences their participation in household finances. Contribution to the household budget increases with relative income of young people, albeit sometimes non-monotonically. Those with higher income than their parents have more ability to decide on personal consumption. Young adults living in the parental home in old member states, Cyprus and Malta are more able to decide about personal expenses and are less likely to contribute to the household budget. In contrast to the conventional assumption of intra-household equality, the majority of young adults seem to benefit from co-residence when taking into account intra-household sharing of resources. This happens because of two mechanisms: parents typically have higher incomes as compared to young adults and also share a larger fraction of their incomes with other household members. Further, we analysed the role of the family or origin in helping children in their transition to adulthood once they have left the parental household and reached residential independence. We explored the characteristics of young Europeans most likely to trigger, and become recipients of, regular economic support. We empirically tested two contrasting hypotheses, whose combination lead to four possible scenarios: whether coming from more advantaged class backgrounds (resource hypothesis) made young people more likely to be recipients than those in circumstances of higher need (need hypothesis). The results showed a strong gradient across countries in the likelihood to be recipient of regular cash transfers, with Southern European countries displaying a much lower probability than others. We did not find evidence supporting a gender divide, or a change over time after the economic crisis, but support for both a strong class effect and the relevance of occupational circumstances. Non- employed children are more likely to benefit from parental support throughout, as are those from higher social backgrounds. However, our results have also shown that parental resources seem more important than young people’s needs: while in all countries (but Belgium) non-employed children had higher chances to be supported, in all countries employed children from higher social backgrounds had a similar or higher likelihood to receive regular transfers as unemployed children from the lower class. Regular cash transfers are thus another way in which social inequalities and unequal transmission of opportunities are being maintained and reproduced. Counteracting this mechanism would entail redistributive policies aimed at supporting the income level of the lower class, especially during non-employment, either through housing allowances, and/or through a universal system of unemployment benefits for young people unrelated to the previous contributive history. Further, we provide descriptive results on how the risk of poverty of those aged 15-29 living independently relative to those in parental home changed between 2005 and 2011, for all young adults and also by gender and parental background. We found that overall in the EU, the at-risk-of- poverty rate of the youth living independently compared to those living in parental home was by 10 per cent higher in 2005 and by 50 per cent higher in 2011. Also, the poverty rates of young adults with low educated parents compared to the the poverty rates of their peers with highly educated parents, is higher than 1.0, either data from 2005 or 2011 are analysed. This risk, in average, increased between 2005 and 2011, from 1.7 to 2.0. On average, the effect of parental background seems to be more important for those still living with their parents: the relative risk of low social background among them is higher than average in both years.