Youth poverty after leaving parental home: does parental income matter?

Abstract

Researchers have now started to look at youth poverty as distinct from child poverty. However none has focused on the intergenerational transmission of youth poverty in European countries. Using four countries for which there are data from the European Community Household Panel, this paper analyses the link between the poverty status of youth after they have left home and the economic status in the family of origin. We adopt a wider age range than in most studies on youth poverty, i.e. between 18 years old and 34. The sample is constitute by youth that have left home as part of a couple. The evidence shows that in Southern European countries there is a negative association between parental income and leaving home as part of a couple: the poorer the family of origin, the less likely is youth to leave home as a couple, so we use a sample selection model (Heckman Probit) to model the probability to be poor after leaving home, where the selection equation is the probability to leave home to live with a partner. We estimate the model separately for each country and also pooling the countries all together using some interactions. The main results show that there is no sample selection bias for any of the countries. The outcome is not different from the one obtained by fitting the Probit and selection models separately. There is a strong effect of the economic status of the family of origin on the probability to be poor in after they have left home, except for Greece. There are not great differences between Italy, Spain and Portugal, even if the intergenerational transmission of poverty seems to be stronger in Spain.