Income sharing and spending decisions of youth living with parents

Marton Medgyesi, TARKI
Ildikó Nagy, Independent Researcher

The study explores the determinants of contribution to household expenses and control over spending on personal consumption among young adult’s (18-34 years) living with their parents, using data from the EU-SILC 2010 ad hoc module on intrahousehold sharing of resources. The study also explores the implications of taking into account intrahousehold sharing of resources for the assessment of income situation of the young. Based on the literature of intra-household household money management we investigate the role of absolute household income and household members’ need and relative income in shaping the observed patterns. Results of ordinal probit regressions confirm the role of absolute household income: youth contribute a higher fraction of their income to the household budget when household income is lower, while ability to decide about own consumption increases as household income increases. The contribution of the young also changes with need for support of both young adult and parents. Contribution of the young is lower when the young adult is unemployed or student, but is higher if the parent is single or non-working. Relative income is also important: contribution to the household budget increases with relative income of young albeit sometimes non-monotonically.