Abstract
We analyze the effect of mothers’ and youths’ reports of family financial stress and relationship dissatisfaction on Australian youths’ transitions into adult roles. We find that mothers’ reports of financial stresses and borrowing constraints are associated with earlier transitions to inactivity, while youths’ reports of financial stresses are associated with earlier nest-leaving. Youths reporting unsatisfactory relationships with parents leave school and move out earlier than their peers, while unsatisfactory relationships between parents are associated with youths making later transitions. Overall, financial stress and dissatisfaction have independent associations with youths’ transitions and youths’ perspectives have different consequences to those of their mothers.
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Notes
See Cobb-Clark and Ribar (2010) for more details about the Australian institutional context.
In Australia, one-third of those living in households experiencing multiple financial stresses are children under the age of 15 (Bray 2001). The lack of a common scale for financial stresses makes international comparisons difficult. Guio (2005) examined four measures of “economic strains” in European countries and found that the percentage of households experiencing multiple deprivations ranged from five percent of less in Denmark, Luxembourg, and the Netherlands to 50 percent in Portugal. As with Australia, Guio found that the deprivation was generally higher in households with children.
Exploratory factor analyses also indicated that a single latent factor adequately explained the correlations among the financial stress responses for each person. Our multivariate results are robust to using predicted factor scores instead of the proportion of affirmative responses and to using indicators for whether any stresses were reported.
Alternative responses included that she could raise that amount “easily” or “with some sacrifice”.
Sensitivity analyses reveal few differences with changing the cut-off by a point either way.
There are ten major statistical regions in Australia. However, due to small sample sizes we combined the Northern Territory and the non-metropolitan portions of Southern and Western Australia into one region and combined the Australian Capital Territory and the non-metropolitan portion of New South Wales into another region. In sensitivity analyses, we experimented with including controls for additional characteristics, such as the mother’s and youth’s physical and mental health, the interviewer’s assessment of the dwelling condition, and initial conditions of the household when the youth was age 15. These did not alter our reported findings.
In effect, parents may have paternalistic rather than altruistic preferences (see Pollak 1988).
The coefficients indicate the direction in which a change in an explanatory variable shifts the hazard probability up or down. The magnitudes of these associations are difficult to gauge because the logistic model is a nonlinear specification and because the hazard probabilities are conditional (i.e., the population at risk, and hence the potential effect, declines as youths age and make transitions).
Unfortunately, small sample sizes prevent us from including interaction terms which would allow for a compounding effect of mothers and youths both reporting financial stress.
The effect of relationship satisfaction is not significant when we consider leaving school before age 18.
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Acknowledgments
This paper uses confidentialized unit record file data from the Household, Income and Labour Dynamics in Australia (HILDA) survey. The HILDA Project was initiated and is funded by the Department of Families, Housing, Community Services, and Indigenous Affairs (FaHCSIA) and is managed by the Melbourne Institute of Applied Economic and Social Research (MIAESR). The findings and views reported in this paper, however, are those of the authors and should not be attributed to FaHCSIA or MIAESR.
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Cobb-Clark, D.A., Ribar, D.C. Financial stress, family relationships, and Australian youths’ transitions from home and school. Rev Econ Household 10, 469–490 (2012). https://doi.org/10.1007/s11150-011-9133-6
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DOI: https://doi.org/10.1007/s11150-011-9133-6