Intergenerational Co-Residence and Children\u27s Incomes

This paper examines co-residence arrangements between older parents and their adult children. We sketch a model of the co-residence choice that accounts for the preferences of the parent and the child and incorporates parental altruism and demands for housing, goods, and privacy. The model predicts that poorer, unmarried or childless siblings are more likely than their siblings to co-reside. The empirical analysis exploits the information provided by respondents in the Asset and Health Dynamics Among the Oldest Old (AHEAD) survey about all of their children living in and outside their household. Indeed, we find that poorer siblings are more likely to co-reside with parents than richer siblings. Furthermore, the deed to a parent’s residence is more likely to be passed to a co-resident child than to a non-co-resident child, conferring another benefit on the co-resident child. Our empirical work controls for observable and unobservable parental characteristics using fixed effects. We also use a “shadow sample” of Health and Retirement Study respondents who live with their parents to infer some missing information on the children of the AHEAD respondents