(June 26, 2012) Though many may dread the idea, young adults who move back home with mom and dad after a job loss may benefit from it more than they realize. Research published in the Journal of Political Economy finds that returning to the nest can be valuable insurance in a tough labor market, serving as a short-term safety net while also keeping long-term earnings from being stunted by a job loss.
“Intuitively, it makes sense that people move home after an employment shock,” said Greg Kaplan, an economics professor at the University of Pennsylvania and the study’s author. “We’ve seen a lot of anecdotal evidence of this during the latest recession, but there hadn’t been much hard data on how common it is or what the effects might be. This study demonstrates that the option to move home is potentially very important.”