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Familial Financial Assistance to Young Adults

May 7, 2012 Comments off

Familial Financial Assistance to Young Adults
Source: National Poverty Center (University of Michigan)

We use the Transition to Adulthood (TA) Supplement to the Panel Study of Income Dynamics (PSID) to examine current trends in financial and material assistance provided by parents to their college-age, young adult children. We also investigate the determinants of these transfers. We find that most young adults receive some form of assistance and that the average annual value of all transfers is substantial, roughly $7,500. We find large disparities by family SES, although we also find that as a share of total family income, the total value of all transfers is fairly consistent across the income distribution. We show that controlling for young peoples’ college attendance, childhood cognitive and non-cognitive characteristics, family income is the most important predictor of both the receipt and value of parental assistance. We find some evidence that parents’ perception of childhood behavior influences discretionary transfers, i.e. gifts and loans. Finally, we find some evidence that these trends were affected by the recession of 2007-2009.

+ Full Paper (PDF)

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