Race and Ethnic Differences in Financial Dependency of Coresident Young Adults During Economic Recessions and Over Time

Abstract

As the number of households with adult children living with their parents increases, it is important to understand the financial dynamics in these households. This study uses pooled data from the Survey of Income and Program Participation to examine changes in three measures of financial dependency of coresident adult children between 1989 and 2009, with a focus on changes during economic recessions and across race and ethnic groups. Financial dependency is measured using information on individual income and rental contributions to capture three dimensions of dependency: absolute income, relative income, and rental dependency. Financial dependency of coresidential adult children has been relatively stable over time, though there is a modest decrease during an economic recession. Black and Hispanic young adults are less likely than Whites to be financially dependent on their parents, potentially contributing to the intergenerational transmission of racial disparities in wealth accumulation with some young adults having an extended safety net and others needing to pool resources with parents.