Leaving home: A comparative analysis of ECHP data

Abstract

We use three waves of the European Community Household Panel (ECHP) to analyse the impact of employment, earnings, household income, and welfare on young adults' decision to leave the parental home. In particular we investigate the importance of these income sources in different welfare settings. We use a simultaneous equation approach to control for unobserved heterogeneity and left censoring. We find employment and income to be very important factors in the decisions of young adults to leave home in the Southern European welfare state. For the Continental European welfare states the results are more mixed. Employment and income are still important factors, but the effects are less clear and there are significant variations. In the Social Democratic welfare states, the effect of employment and income appears negligible. The effect is also modest in the UK (the Liberal Market state), a finding we attribute to the educational system.