Young people leaving and returning home in Europe and the United States: a microeconometric analysis.

We sought to establish how young people's process of household formation differs across countries. Our particular focus was on departures from the parental home and returns to it. We used large micro datasets to explore the determinants of these flows, with specific attention to economic factors. We presented international evidence on the differences in living arrangements and departure rates, and reviewed the problem and the literature. We realised that home-leaving had found limited space in the economic literature until only very recently, while previous research mainly consisted of descriptive cross-sectional studies of living arrangements, with rare cross-country quantitative analyses. We therefore highlighted the areas of research that required further analysis. Since there are large differences in household structure within Europe and in comparison to the US, we posited a simple theoretical framework and estimated a dynamic model of departure from home with multiple destinations. Using several datasets (ECHP, BHPS, SOEP, NLSY) we analysed how the determinants of departure compare and whether the differences in residential decisions can be explained by looking at children's and parents' income and labour market situation. Our results suggest that, for Southern Europeans, economic circumstances are significant but their effects are small, while for the UK and the US the effects of economic variables are much larger, with potential income being a more important covariate than current income. Finally, we examined young people's return to the parental home. After presenting basic descriptive statistics showing high return rates across countries for unmarried youth, we showed that the role of economic factors is important in the UK and the US, indicating that returning to the family appears to provide a fall-back solution for young unmarried people. We found significant differences between countries, as well as between genders and between married vs. unmarried youth