Leaving the Parental Nest and Later Life Socioeconomic Outcomes: Does the Timing of Exit Matter? A Within-Sibling Analysis Using the Panel Study of Income Dynamics

The decision to leave the parental home can be one of the most important decisions to be taken by young adults. In this paper I look into the impact of this decision on later life labour market outcomes using panel data from the Panel Study of Income Dynamics (PSID). All unmeasured parental background and household factors are controlled for through a within-siblings model that compares outcomes between same-sex siblings. I find that exiting the parental home too soon can lead into worse outcomes later in life, and that is especially true for mid-life income measures. This result holds even after an Instrumental Variables robustness check using historical US state house price data. Men with low education have better outcomes on average if they delay leaving home and these estimated effects are larger when unobserved family effects are controlled.