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Should I stay or should I go? Sibling effects in household formation

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Abstract

This paper analyzes peer effects among siblings in the decision to leave parental home. Estimating peer effects is challenging because of problems of reflection, endogenous group formation, and correlated unobservables. We overcome these issues using the exogenous variation in siblings’ household formation implied by the eligibility rules for a Spanish rental subsidy. Our results show that sibling effects are negative and that these effects can be explained by the presence of old or ill parents. Sibling effects turn positive for close-in-age siblings, when imitation is more likely to prevail. Our findings indicate that policy makers who aim at fostering household formation should target the household rather than the individual and combine policies for young adults with policies for the elderly.

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Notes

  1. In 2010, almost 60 % of young people in the 18–34 age bracket lived in their parental homes in Italy, Spain, Portugal, and Greece, whilst that statistic is below 40 % in France, the UK, and the Netherlands, and as low as 20 % in Norway, Sweden, and Finland. Source: Eurostat, EU-SILC.

  2. Angelini and Laferrère (2013) show that both cultural traits and the parental ability to help their children by either providing them with a home, or with a financial transfer to move out, affected the nest living patterns over time and across European countries. For an analysis on the heterogeneity of parental altruism across countries see Horioka (2014).

  3. Children may offer caregiving activities out of altruism for their parents, or in exchange for monetary incentives offered by the family members benefiting from the services received. See Grossbard (2014) for a discussion on the motives behind caregiving.

  4. See, for instance Bayer et al. (2008), Burke and Sass (2013), Carrell et al. (2008), Gaviria and Raphael (2001), Hensvik and Nilsson (2010), Maurin and Moschion (2009) and Nicoletti and Rabe (2014).

  5. See, for instance, Carrell et al. (2013), Hoxby (2000), Katz et al. (2001) and Sacerdote (2001).

  6. See Angelucci et al. (2010), Baird et al. (2014), Dahl et al. (2014), Hesselius et al. (2009) and Lalive and Cattaneo (2009).

  7. Solon et al. (1991), Björklund et al. (2002), Mazumder (2008), and Schnitzlein (2014) investigate sibling effects in income; Björklund and Salvanes (2011) and Nicoletti and Rabe (2014) in school achievement; Kuziemko (2006) in fertility; and Altonji et al. (2015) in teenage substance use.

  8. Source: Spanish Wage Structure Survey, 2008.

  9. Note that the policy does not generate incentives to postpone emancipation for 21 year-olds. Emancipated 21 year-olds will be entitled to the same amount of subsidy as soon as they become eligible. Aparicio and Oppedisano (2014) provide an empirical test that confirms that postponement is not significant.

  10. Aparicio and Oppedisano (2014) show that the majority of individuals who were eligible in terms of age actually fulfilled all other criteria.

  11. We ran our regressions omitting observations for the years after the sibling emancipated and results are very similar to those obtained when they are included. Results are available from the authors upon request.

  12. The time frame does not include 2005 because, for individuals interviewed in 2005, we observe household formation decisions from 2006.

  13. We also estimated all the outcomes using household and individual fixed effects and results are invariant.

  14. Spanish newspapers documented that some regions experienced delays in processing the subsidy during the first months of its application due to lack of communication between administrative entities (El Pais, 05/02/2008).

  15. The coefficients of the dummies for the combinations of individual’s and sibling’s gender are not identified as they are absorbed by the sibling-pair fixed effects.

  16. The variable sibling’s education reflects the number of completed levels of education. This is, it equals 0 for siblings who did not complete any educational level, 1 for siblings who completed the first level (primary education), 2 for siblings who hold the second level diploma (secondary education) and 3 for siblings who completed the third level (tertiary education).

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Acknowledgments

The authors thank for useful suggestions Cristian Bartolucci, Alex Tetenov, Cheti Nicoletti, seminar participants at EALE conference in Turin, University College Dublin, Universidad Autonoma de Madrid, Freiburg University, and the Spanish Economic Association conference in Mallorca.

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Authors and Affiliations

  1. Collegio Carlo Alberto, IZA, and CHILD, Via Real Collegio 30, 10024, Moncalieri, TO, Italy

    Ainhoa Aparicio-Fenoll

  2. Westminster Business School, University of Westminster, IZA and IFS, Old Castle, London, E17NT, UK

    Veruska Oppedisano

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  1. Ainhoa Aparicio-Fenoll
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  2. Veruska Oppedisano
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Correspondence to Ainhoa Aparicio-Fenoll.

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Aparicio-Fenoll, A., Oppedisano, V. Should I stay or should I go? Sibling effects in household formation. Rev Econ Household 14, 1007–1027 (2016). https://doi.org/10.1007/s11150-016-9325-1

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