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Failure to Launch: Cross-National Trends in the Transition to Economic Independence

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Abstract

The employment statistics reveal many consistent trends across the six countries. Employment rates have generally fallen among teenagers, both male and female. Women's employment rates after age twenty-five have increased, with particularly large gains in countries that had low female employment rates in the mid-1980s. In contrast, employment rates among men age twenty-five and older have remained unchanged or declined (see Ghidoni 2002). The combination of these two trends has meant that the working careers of men and women under age thirty-five are now much more similar. However, major differences across the countries still remain. Employment begins earlier in the three English-speaking countries than it does in the three continental European countries, especially in Belgium and Italy, even if the cross-national age employment gap largely disappears among men by the time they reach their early thirties. And important cross-national differences among twenty-five- to thirty-four-year-old women remain. Moreover, explanations for the different levels and trends in employment are varied, with no single dominant explanation for either men or women.
Luxembourg Income Study
Working Paper Series
Luxembourg Income Study (LIS), asbl
Working Paper No. 456
Failure to Launch: Cross-National Trends
in the Transition to Economic Independence
Lisa Bell, Gary Burtless, Janet Gornick and Timothy M. Smeeding
January 2007
Fourth draft
January 15, 2007
Failure to Launch:
Cross-National Trends in the Transition to Economic Independence
by
Lisa Bell and Gary Burtless
The Brookings Institution
Washington, DC
Janet Gornick
Baruch College, CUNY
Luxembourg Income Study
and
Timothy M. Smeeding
Maxwell School, Syracuse University
Luxembourg Income Study
January 15, 2007
This paper was prepared for a Conference on the Economics of the Transition to Adulthood for
the Research Network on Transitions to Adulthood and received partial support under a cross-
national study of working time and income distribution funded by the Alfred P. Sloan
Foundation. We are grateful to both the MacArthur Foundation Research Network on the
Transition to Adulthood and the Sloan Foundation for support and to Rucker Johnson, Sheldon
Danziger, and two anonymous referees for helpful comments on an earlier draft. The views are
solely those of the authors and should not be ascribed to the Sloan Foundation, the Brookings
Institution, or the Luxembourg Income Study.
Failure to Launch:
Cross-National Trends in the Transition to Economic Independence
Abstract
We analyze trends in the age of economic independence in six industrialized countries, Belgium,
Canada, Germany, Italy, the United Kingdom, and the United States. The paper compares trends
in the household living arrangements, employment rates, earnings levels, and net incomes as
young adults rise in age from 18 to 34 years old. Our results show a picture of generally
declining independent living and economic self-sufficiency (‘failure to launch’) among 18-34
year-old men and women in their early 20s from the mid-1980s to 1995-2000. The exceptions
are women in their late 20s and early 30s , who have somewhat improved prospects for
economic independence, although from a starting level that was well below that observed among
men of the same age. North America (the United States and Canada ) and to some extent the
U.K. offer partial exceptions to this general pattern. Between the mid-1980s and 2000
employment rates improved among young Americans in their late 20s and early 30s, and
earnings levels either remained stable or increased modestly. The stability of U.S. employment
levels helped to offset an apparent reduction in male hourly wage rates for this group , giving 26-
34 year-old American men either larger gains or smaller losses in economic self-sufficiency
compared to those experienced by their counterparts in continental Europe. In addition, young
women in the U.S. who were 26 and older saw bigger improvements in wage self-sufficiency
than most of their counterparts in continental Europe. In the closing section we speculate on the
possible causes for such changes.
ii
Failure to Launch:
Cross-National Trends in the Transition to Economic Independence
In contrast to retirement, which for many years occurred at progressively younger ages,
the transition of young adults from parental dependence to economic self-sufficiency has taken
place at ever older ages in industrialized countries. One reason for the delay, which we call
‘failure to launch,’ is that well-compensated jobs now require more schooling. This explanation
is incomplete, at least in the United States, because schooling attainment among 25-34 year-olds
has increased relatively little since the early 1980s (Haveman and Smeeding, 2006, figure 1, p
136) . Another reason for delayed economic independence may be labor market changes that
have made well-paid employment harder for young people to obtain. If so the relative earnings
of young workers may have declined in comparison with earnings at older ages or in relation to
the income needed to support an independent household.
This paper presents an exploratory analysis of trends in the age of economic self-
sufficiency in six industrialized countries--the United States, Belgium, Canada, Germany, Italy,
and the United Kingdom. We compare the employment rates, earnings levels, and net incomes
of cross-sections of young adults in the mid-1980s and cross-sections of adults in the same age
group drawn in the period from 1995-2000.In Belgium our income data cover 1985 and 1997; in
Canada, 1987 and 1997; in Germany, 1984 and 2000; in Italy, 1987 and 2000; in the United
Kingdom, 1986 and 1995; and in the United States, 1986 and 2000. Although the data do not
cover the same years or even the same number of years in all countries, in each nation the data
cover a span of at least nine years. In order to make the data for Germany comparable in both
periods, we confine our analysis of income data to young adults in the former West Germany.
Our income and household composition data are primarily drawn from the Luxembourg Income
Study, or LIS (see http://www.lisproject.org/techdoc.htm for a description and documentation). The
LIS database contains comparable household income measures for a large number of nations,
and it also contains consistent time series information on individual-level wages that is
comparable enough so that we can analyze earnings, by age, at several points in time for the six
nations we study here . We further supplement the LIS data with information on employment
drawn from national labor market surveys.
After this introduction, we divide the paper into five main sections, a discussion of data
issues, an overview of trends in household headship, an analysis of employment status, an
examination of trends in young adults’ earnings relative to median national income levels, and an
assessment of income adequacy among young adults who live inside and outside of their parents’
households. We define young adults as people between 18 and 34 years old, dividing the
population in a given year into overlapping 5-year age groups. The youngest age group is 18-22
years old, and the oldest is 30-34 years old. By using these overlapping age groupings we reduce
the sampling variability of our estimates. A longer discussion of many of the statistical issues
we confront here is found in Smeeding and Ross Phillips (2002).
Our findings can be summarized briefly. Over the period covered by our analysis, young
adults were increasingly less likely to form independent households in which they were the head
of household or were married to the household head. The decline in headship was most striking
among young adults age 22 and older, and it was more noticeable in continental Europe than in
either the U.K. or North America (U. S. and Canada) . In comparison to the other countries in
our sample, the U.S. experienced relatively small changes in headship patterns between 1986 and
2000. Our findings on employment changes and trends in wage and salary income provide one
partial explanation for this broad pattern. Young adult men in continental Europe typically
experienced larger employment losses and a bigger drop in wage income than did their
counterparts in the U.K. or North America. This pattern most likely reflects continental
Europe’s persistent difficulty in generating strong employment growth, especially for workers
with limited skill who are struggling to enter the labor force. Whatever the cause of the earnings
losses, they have made it harder for young men to establish independent households. In all six
countries women between age 25 and 34 experienced gains in employment, and in the U.K. and
North America these gains were accompanied by notable improvements in wage income. Even
though fewer women than men earn high enough wages to support a household on their own, the
combination of female earnings gains and male earnings losses substantially reduced the gap
between men’s and women’s income potential.
Our analysis of household income trends shows, not surprisingly, that income adequacy
has declined among households containing 18-34 year-old adults. Further, the losses are larger in
Europe than in North America. Between 1986 and 2000 there was very little systematic decline
in income adequacy among U.S. households containing young adults. Since young Americans
2
had less adequate incomes than young Europeans in both the mid-1980s and 1995-2000, the
income trends between those two periods tended to reduce the gap between the young people on
the two continents.
We also find that losses in income adequacy were much larger among young adults who
lived independently of their parents. Young adults who remained in their parents’ households
were therefore partially protected against the drop in living standards that might be expected to
accompany a decline in job opportunities or a loss of wages, evidence consistent with the
Newman chapter in this volume. Our evidence suggests a pervasive pattern of sizeable decline in
young adults’ income adequacy, especially in the youngest age groups, among those young
adults living outside the households of their parents.
Taken as a whole, these results imply that reduced employment rates and wages among
young adults imposed a sizeable penalty on living standards, but the penalty was biggest for
young adults who were living independently of their parents. Interestingly, the decline in
“independent” young adults’ income adequacy was typically smaller in the U.S. than in the other
countries. This may have been because male employment prospects declined less in the U.S.
than in most other countries. Our evidence shows that they declined much less than those of
young men in continental Europe.
I. Data
Most of our analysis relies on LIS data files. The LIS data provide accurate information
on household net income which can be disaggregated into identical components for households
in each of the LIS-member countries.1 The source of the LIS information for the U.S. is the
Current Population Survey (CPS). This household survey provides high-quality and
comprehensive data on household composition, income, and labor force status for all individual
adults for at least a 25 year period. Although other countries provide LIS with equal or even
superior information on household income, few countries provide data sets with such high
quality records on respondents’ recent work experience and labor force attachment. This
shortcoming represents a challenge for analyzing the path to economic independence, and so the
LIS data are supplemented with information on employment status that is drawn from official
labor force surveys in these same nations. The labor force surveys include detailed employment
3
data, but the data available to us from those surveys include no information on family structure,
living arrangements, wages, or other components of income.2
II. Household headship
One indicator of economic self-sufficiency is an individual’s capacity to live outside the
household of his or her parents. Many young people who have little independent income
continue to live with their parents rather than to live alone. One reason is economies of scale in
household living arrangements. Two people who live separately need more kitchens, bathrooms,
furniture, and household appliances than two people who live together in the same dwelling. By
continuing to live with their parents, young adults can enjoy a more comfortable standard of
living with a small cash income, not only because of these scale economies but also because they
may receive transfers from parents in the form of free food and housing. The household head is
usually defined as the person most knowledgeable about “household matters,” the person who
owns the dwelling occupied by the household or in whose name the dwelling is rented, or the
person with the highest income. Under any of these definitions, a young person who lives with
his or her parents would rarely be classified as the household head. In the exceptional cases
where young adults are classified as heads and their parents are identified as secondary
household members, it is likely the child is supporting the parent rather than vice versa. In our
cross-national analysis of the age pattern of household headship, we also classify the spouse of
the LIS-identified head as a household head.
Figure 1 shows the percentages of young people at successive ages who were heads of
households or the spouses of household heads between 1995 and 2000 for men (top panel) and
for women (bottom panel).3 . For both groups the chart shows a steady increase in the
percentage of young people who are household heads with advances in age. At any given age,
men are less likely to be a head of household (or the spouse of a head) than are women. This is
because women typically marry at younger ages than men, and thus would be classified as
household heads at a younger age. Young Italians have exceptionally low rates of household
headship, a pattern that is apparent for both genders and in both periods. In 2000, for example,
just 30 percent of 24-28 year-old Italian women were household heads or the spouse of a head
(see Newman chapter). For women of the same age in the other countries, this percentage
ranged from 65 percent in Belgium up to 85 percent in the U.K. Young people in the U.K. form
their own households at somewhat younger ages than is the case in the other countries, perhaps
4
owing to the availability of subsidized council housing or low cost market rentals. In part, the
very late formation of Italian households may be due to the relatively high cost of home owning
and renting in Italy (Bucks and Pence 2005, Appendix; Giannelli and Monfardini 2000; Ruiz-
Castillo and Martinez-Granado 2002). It may also be due to cultural factors (Giuliano 2006) or
parental income gains which makes it possible for parents to live in houses large enough to hold
space for their adult children (Manacorda and Morretti 2002).
How has headship changed for each group? In all six countries household headship rates
declined between the two periods (see detail in Appendix Table A-1). The only notable
exception to this pattern was among U.K. women, who were somewhat more likely to head
households or to be married to a household head in the later period. There were only small
changes in household headship in the youngest age groups, but the decline in headship was
progressively larger among adults in their mid-20s. The falloff in headship was particularly
large in Belgium and Italy , and among German women in their late 20s and early 30s. The
decline in household headship was 10 percentage points or more among Belgian and Italian
women in their 20s and among German women in their late 20s. Headship declined 20
percentage points among Italian men ages 26-34 , and among Italian women between 22 and 26.
The changes in household headship were smaller in the U.K., Canada, and the United States. As
we shall see, this may be partly explained by the generally more favorable labor market
conditions in those countries.
III. Employment patterns: Levels, trends, and the impacts of fertility
and higher education
As noted earlier, the LIS variables that measure employment status are not ideal for
determining employment patterns among people in the LIS samples, especially those who do not
head households and the income surveys used in the LIS do not necessarily provide cross-
nationally comparable data on respondents’ labor force status. Official labor force surveys in the
six countries offer a more dependable and consistent way to measure employment trends.4 We
obtained annual estimates of the employment-to-population ratio for four young age groups
using statistics compiled by Eurostat, Statistics Canada, and the U.S. BLS. Employment rates
covering the period from 1985-2005 are displayed in Table 1.5 We have included the 2005 data
because in several countries, including Belgium, Germany, the U.K., and the U.S., there was a
sharp deterioration in young adults’ employment rates after 2000.
5
As expected, in all six countries and in each year, male employment rates increase
sharply with age while women’s rates were more varied. In 1985 teenage employment rates
were much lower in Belgium and Italy than in the other four countries, but male employment
rates in all six countries converged at older ages. Employment rates among female teens and
young women in their early twenties were lowest in Belgium and Italy, and considerably higher
in the other four countries. By age 30-34, women were more likely to be employed in North
America than in Europe. After age 20 young women’s employment rates are notably lower than
those of men the same age. In both the earlier and later periods, the male-female employment
gap typically grows with age.
Employment and birthrates In 1985 there was a dip in the female employment rate after a
peak rate that was attained at some age between 20 and 29; the pattern is visible to a greater or
lesser degree in all six countries. The dip is probably caused by labor force withdrawal of
mothers as a result of child-rearing responsibilities after the birth of a child. Further, the dip in
women’s employment rates after their 20s is apparent for all countries in 1985, but the dip
disappears in all countries by 2005. One explanation for the disappearance of the dip may be the
postponement of first births until after age 30. However, birth rates did not decline in all
countries. Between 1985 and 2000 birth rates rose in Belgium and the United States and
remained roughly unchanged in Germany and Canada (United Nations Economic Commission
for Europe 2005). The more likely explanation is that European mothers have become less
willing to withdraw from market work after the birth of a child. Even if they temporarily leave
the labor force, the interruption in a new mother’s career typically did not last as long in 2000 or
2005 as it did in earlier decades. While these patterns may differ across countries, due in part to
variation in institutional factors such as child care and family leave (Gornick and Meyers, 2003),
the basic pattern is robust in all nations (see for example Köppen 2006 on Germany and France).
Employment trends. The trends in employment after 1985 differed somewhat among the
six countries. In all countries employment followed strikingly different paths for men and
women past age 24. Men past 24 experienced a slump in employment in Continental Europe but
saw little change in the U.K. and North America. In Belgium, Germany, and Italy the job-
holding rate of men age 25-34 fell between 5 percentage points and 9 percentage points, a
substantial drop for a population that is expected to be largely self-supporting. In contrast,
women between 25 and 34 experienced rising employment rates in all six countries. The
6
increase in women’s employment was smallest in the United States, where female job holding
was already common in the mid-1980s. The rapid female employment gains in Belgium,
Canada, and the U.K. have meant that job-holding rates among 25-43 year-old women are now
higher in those countries than they are in the United States.
The contrasting employment trends of men and women produced a sizeable narrowing of
the male-female employment gap between 1985 and 2005. Among 30-34 year-olds the gap
shrank 21 percentage points in Belgium and Italy, 18 points in Germany, 16 points in the U.K.,
13 points in Canada, and 6 points in the United States. It may be tempting to conclude that the
job gains of young women were achieved partly at the expense of young men the same age. In
the U.K. and North America, however, the employment-rate gains of 25-34 year-old women
were not accompanied by any employment losses among men in the same age group.
Employment and education. Employment rates among younger men (under 25) and most
women (under 20) fell in the two decades after 1985. The male employment loss was biggest in
Germany and Italy, and it was negligible in Canada. Virtually all of the decline in the United
States took place after 2000, the last year of a long economic boom. Although the long-term
employment decline at the youngest ages is undoubtedly connected to rising school attendance
and increased educational attainment, this explanation does not account for the recent drops in
teenage employment in the United States. Job-holding has declined among teenagers and adults
in their early twenties among those who are out of school as well as among school enrollees.
Among men past age 20, the drop in employment has been much larger in Continental Europe
than in either Great Britain or North America, widening the employment-rate gap between these
countries. In the U.K. and North America the job-holding rate of 20-24 year-old males ranged
between 70 percent and 74 percent in 2005. In Belgium, Germany, and Italy it ranged between
49 percent and 60 percent.
Statistics on educational attainment do not provide a simple explanation for the
employment gap between the different regions. Table 2 presents Organization of Economic
Cooperation and Development (OECD) estimates of the number of years of formal schooling in
the population aged 25-34 in 2002 . On average, men and women in this age group have more
years of schooling in North America than they do in Belgium, Germany, and Italy. Assuming
that few young people work when they are full-time students, this evidence suggests that on
average careers should begin later in Canada and the United States than they do in Belgium and
7
Italy. Instead, paid employment begins at a considerably younger age in North America than it
does in Belgium or Italy.
Summary. The employment statistics we review above reveal many consistent trends
across the six countries. Employment rates have generally fallen among teenagers, both male
and female. Women’s employment rates after age 25 have increased, with particularly large
gains in countries which had low female employment rates in the mid-1980s. In contrast,
employment rates among men 25 and older have remained unchanged or have declined (see also
Ghidoni 2002). The combination of these two trends has meant that the working careers of men
and women under age 35 are now much more similar than was the case in 1985, but major
differences among the countries still remain. Employment begins earlier in the three English-
speaking countries than it does in the three Continental European countries, especially in
Belgium and Italy. The cross-national employment gap largely disappears among men by the
time they reach their early 30s. And even amongst 25-34 year-old women there remain
important cross-national differences. Moreover, explanations for the different levels and trends
in employment are varied, with no single dominant explanation for either men or women
IV. Earnings and self-sufficiency
Holding a job, even a full-time, year-round job, does not assure workers of an income
that is high enough to live independently or to support a family in the United States (see Duncan
et al. 1996 for an analysis of U.S. data). To examine income self-sufficiency we develop two
kinds of measures of earnings adequacy among young adults.
Our first indicator measures young adults’ average earnings compared with the median
adjusted disposable (net) household income in their country. If every person lived in a single-
person household, this concept would be easy to measure as the median after-tax and after-
transfer income in the country. But household sizes differ, and household spending needs will
vary as a result. One way to deal with differences in the number of household members is to
estimate the change in income required to hold living standards constant when a household gets
larger or smaller. In principle, such an adjustment allows us to calculate “equivalent” incomes
for households of different sizes. A common adjustment, which we use here, is to assume that a
household’s income requirements increase in proportion to the square root of the number of
household members. Formally, adjusted disposable income (ADPI) is equal to unadjusted
8
household income (DPI) divided by household size (S) raised to an exponential value (e), that is,
ADPI = DPI/Se. Our assumption implies the value of e is ½.6 For each country and time period
included in our analysis, we computed the national median ADPI. Table 3 contains estimates of
the average earnings of young adults measured in relation to the national ADPI.
Another approach to measuring economic self-sufficiency is to calculate the percentage
of young adults who can afford to live independently. We calculate this percentage by
measuring whether young people have enough wage and salary income to attain the national
poverty line or higher income in a given year assuming that they live alone. We define the
poverty threshold as equal to one-half the national median ADPI. If a worker earns or has access
to enough independent income to exceed this threshold, he or she is classified as self-sufficient.
Average earnings. Table 3 shows average annual earnings, by age group, among the
young adults who earn wage and salary incomes. The exclusion of self-employment income can
lead to some understatement of young adults’ capacity to be self-sufficient. We address this
issue by examining young peoples’ total net incomes in a later section.7 In this section we are
mainly interested in determining whether adults can support themselves comfortably with the
wages they can earn in the labor market. Even though the calculations exclude self-employment
income, and thus understate some people’s total earnings, the trend in wage and salary income
offers a clear indicator of the main income source that young adults must depend on to support
themselves.
The six countries in our sample are not uniform in the way they report person-level
earnings in the LIS data files. Belgium and Italy report after-tax wages, while Germany, the
U.K., Canada, and the U.S. report pre-tax wages. Most workers pay taxes on their earnings,
including both payroll taxes and income taxes. These taxes are already subtracted for Belgian
and Italian workers, but they are included in the earnings estimates for the other four countries.
Ignoring tax payments will actually understate the net earned incomes of many low- and
moderate income Americans who have child dependents, since it ignores a refundable earned
income credit (EIC) that the U.S. pays to low-income families. For low-wage earners the EIC
can easily exceed the worker’s other payroll and income tax liabilities. The credit was
significantly liberalized between 1986 and 2000, boosting the after-tax incomes of low-income
wage earners much faster than is indicated by the change in their pre-tax wages. Because of the
difference between the earnings measures for Belgium and Italy, on the one hand, and Germany,
9
Britain, Canada, and the U.S., on the other, readers should interpret the results showing average
earnings levels with caution.
The top panel in Table 3 shows earnings levels in the earlier time period, while the
second panel shows earnings levels in the later period. The age profile of wage and salary
earnings is more steeply sloped for men than it is for women, and this is true in both the earlier
and later survey years. One reason may be that earnings progression is slower among women
than it is among men who remain steadily employed. The more important reason, however, is
that the table shows the mean earnings of all persons, regardless of whether they have any wage
earnings. Since the employment gap between men and women rises with age, this procedure will
produce a larger rise in measured earnings gains among men than among women. The table
shows sizeable differences among the six countries both with respect to the average level of
young people’s earnings and the gains in average earnings that accompany increases in age.
Among men, the earnings growth that is associated with age is highest in Germany where a steep
male age-earnings profile produced the highest wage levels in the mid-1980s. German men
between 25 and 34 earned the highest relative wages recorded in the table. However, the drop in
Germany’s young male employment rates depressed earnings levels among men in all age
groups between 1984 and 2000. By the mid- to late 1990s, 26-34 year-old men in the U.K.,
Canada, and the U.S. earned relative wages that rivaled or exceeded those earned by German
men. Among women in their late 20s and early 30s, average wages are higher in the U.S. than
they are in the other countries with which the U.S. can be validly compared. (Because Belgian
and Italian wages are measured on a post-tax basis, we cannot reliably compare earnings levels
in those two countries with earnings levels in the other four.)
Earnings differences and trends. The more interesting statistics in Table 3 are presented
in the bottom two panels. The third panel shows the proportional changes in average wages
between the first and second LIS surveys. These results show a sizeable reduction of average
earnings among most groups of men and younger women. The losses are typically much bigger
in Europe than they are in the United States. Women who were in their mid-20s or older saw
their earnings rise in Britain, Canada, and the United States. Women of the same age in the other
three countries experienced smaller earnings losses than younger women, and they experienced
much smaller losses than the ones suffered by men in the same age group.
10
The bottom panel in Table 3 shows the proportional change between the first and second
surveys in average wages received by the men or women who have positive wages.8 The pattern
of average earnings change displayed in the bottom panel is striking. It shows declines in the
average wages of employed men in all countries and in virtually all age groups. The declines are
smaller in the U.S. than they are in other countries, and among men past age 25 they are notably
smaller in the U.K., Canada, and the U.S. than they are in the three countries in continental
Europe. Average earnings changes experienced by employed women show a somewhat more
hopeful pattern, especially among women who are past age 22. Women in these groups
experienced relative earnings improvement, at least in the English-speaking countries, and
women in those groups that experienced earnings reductions saw their earnings decline by a
smaller proportional amount than men in the same age group. The combined results for men and
women suggest that, in comparison with women, men in these countries saw a much steeper
decline in their ability to maintain independent households. Women in their mid-20s or older
saw some real improvement in their private earnings capacity to support a family in several of
the countries, notably the U.K., Canada, and the U.S. (Gornick and Meyers 2003; Neyer 2003)
Individuals who can achieve a poverty-line income. Table 4 shows the percentage of
young adults who can support themselves in a one-person household using the incomes they
derive solely from their own wage and salary earnings. Self-sufficiency is achieved if a person
earns at least one-half the national median ADPI. As noted earlier, this calculation is based on
reported after-tax earnings in Belgium and Italy and pre-tax earnings in western Germany,
Canada, the U.K., and the U.S. The calculations may therefore overstate the percentage of
Germans, Britons, and Americans who are self-sufficient based on their net wage income.9
The fraction of young men who can support themselves with wage and salary income is
modest at ages 18-22 but climbs with age. By age 30-34 large majorities of men in all countries
earn enough wages to surpass the poverty line. The results in the bottom panel of Table 4 show
that the percentage of young men who can support themselves solely with their own wage
income has declined for some or all age groups in every country. There was an improvement in
only one group of males, U.S. men 26 years old and older. Earnings self-sufficiency rates fell
for all male age groups in the other five countries. The losses were negligible for younger Italian
men, who had an exceptionally low rate of self-sufficiency in the mid-1980s. The drop in
earnings self-sufficiency was also more modest among men 30 years old and older. In some of
11
the younger age groups, the fraction of men who could support themselves with their own wage
earnings fell 10 percentage points or more between the mid-1980s and 1995-2000.
Not surprisingly, women have lower rates of earnings self-sufficiency than do men in all
countries and in both time periods. The gender gap is small in the youngest group, but it rises
with age up through ages 30-34. Between the mid-1980s and 1995-2000 women were more
likely than men to see an improvement in their earnings self-sufficiency, however. The
improvement was much more pronounced among women who were at least 26 years old (see the
bottom panel in Table 4). Women in the youngest age groups saw a drop in earnings self-
sufficiency in all five countries, with sizeable declines occurring in every country except Italy
and the U.S.
Summary. The results in Table 4 reinforce the findings in Tables 1 and 3. Changes in
employment and earned income have typically favored young women over young men, reducing
the gender gap in self-sufficiency, especially at older ages. Proportional losses in employment
and earnings have been larger among people in the youngest age groups relative to those
experienced by adults age 30-34. Finally, wage gains among 26-34 year-old women have been
larger and wage losses among 26-34 year-old men have been smaller in the U.K., Canada, and
the U.S. than in Belgium, Germany, and Italy. The losses in self-sufficiency among the youngest
men and women, primarily as a result of lower employment rates and wages, certainly contribute
to the result that some young people to postpone establishing an independent household. Past
age 26, however, the gains in employment and self-sufficiency among women have acted as
partial offsets to the employment and earnings losses of men the same age. Although fewer men
age 26-34 are able to support themselves with their own earnings in the later period , more
women in that age group earn enough wages to support themselves above the national poverty
line in the later vs. the earlier period .
V. Household income adequacy
The results we have presented so far provide an incomplete picture of the transition to
self-sufficiency. They focus on trends in household headship, employment, and wage income,
but they ignore the potential contributions of other sources of income available to young adults
who establish independent households. The previous calculations do not include income from
self-employment, savings, and property, for example. Nor do they account for the public
12
transfers that might be available to an independent household that receives little private income.
Finally, the calculations ignore the potential income contribution of a spouse, housemate ,or
unmarried partner. Even though earnings self-sufficiency has fallen among men age 26 to 34, it
has risen among women the same age. Men may have less capacity to support themselves
independently, but when their earnings are combined with those of a working spouse or partner,
the independent household’s combined resources may be enough to support the couple in relative
comfort.
In order to determine whether a dependent young adult can obtain enough income to
support himself or herself as an independent head of household, it is necessary to predict how
much net income would be received by the household and how many members the household
would contain. It is obviously difficult to calculate the resources and needs of a hypothetical
household. LIS provides information on the incomes of actual households, but except in the case
of wages and a few other income items, the LIS data files do not always identify the person
within the household who receives the income until the later period.10
Rather than make the difficult predictions just described, we have performed a simpler
exercise to measure trends in income adequacy among two kinds of young adults. We first
divided 18-34 year-old adults into two groups, labeled “parental dependents” and
“independents,” on the basis of their household living arrangements and headship status. People
who are dependents in a household headed by their parent or step-parent are classified as
“parental dependents.” Young adults classified as “independents” include household heads and
those who are neither dependents in their parents’ households nor household heads. As before,
we define “household heads” to include both the person identified in the LIS file as a head and
the spouse of that person.11 For young adults in each of the two groups we then calculate the
ADPI of the adult’s household. This calculation takes into account all net income received by
the household, regardless of whether it is earned by the young adult. The tabulations do not
show how much income would have been obtained by parental dependents if they had formed
households of their own. Instead, they allow us to compare trends in the income adequacy of
young people depending on whether they live with their parents or live more independently.
Dependents’ self sufficiency Table 5 displays estimates of the income adequacy of young
adults who remain members of a household headed by their parent. We classify a household as
having adequate income if its ADPI is at least 50 percent of the national median ADPI
13
(income).12 Using this threshold, the percentage of households deemed to have an adequate
income is very high except in Italy and the U.S. This result is consistent with the finding that
relative poverty rates in Italy and the U.S. are higher than found elsewhere in the OECD
(Smeeding 2006, p. 74). In some age groups the number of young adults included in a cell is
very small. Recall that the percentage of all adults who remain “parental dependents” declines as
a cohort ages (see Figure 1). Thus, the sample sizes used to estimate income adequacy in some
of the older age groups may be too small to yield precise estimates. The top panel in Table 5
shows income adequacy rates in the first LIS survey; the middle panel shows identical statistics
based on data from the second LIS survey; and the bottom panel shows the percentage-point
change in income adequacy rates between the two surveys.
The striking result in Table 5 is the very small change in income adequacy for “parental
dependents” in the LIS samples. This result is shown in the bottom panel of the Table. Income
adequacy rates typically declined between the mid-1980s and 1995-2000, but the decline was
proportionately much smaller than the fall in young adults’ employment rates or wage income
might suggest. The reasons that “parental dependents” fared so well probably differ across
countries. Some countries may have strengthened public income protection, partly or fully
offsetting the decline in young adults’ earnings. In other countries, the earnings or property
income of older adults in the households may have risen, compensating the household for part of
the loss in young adults’ wages. Young adults with poor employment prospects may have been
more tempted to remain in a parent’s household when the parents were relatively well off. If a
child with meager earnings remains in the parental household it will reduce the household’s size-
adjusted income, but it will not necessarily reduce the average income of households containing
a dependent adult child. On the contrary, if adult children are disproportionately likely to remain
in the households of affluent parents, the average income of households containing adult children
might actually rise over time even as the earnings prospects of young adults deteriorate.
Non-dependents self sufficiency. Table 6 shows an identical set of tabulations for all
young adults who were not dependents in a parent’s household. These households typically have
lower rates of income adequacy than households containing a dependent adult child, though the
difference between the two kinds of households is considerably smaller in the older age groups
compared with the youngest group. An interesting exception to this pattern is Italy, where
income adequacy among “independent” young adults is higher or only slightly worse than it is
14
among “parental dependents.” Of course, living with a parent is much more common in Italy
than it is in the other five countries, and it remains common until later in life (Giuliano 2006).
Neither Italy nor the U.S. stand out has having exceptionally low rates of income adequacy
among “independent” men. Among “independent” women, however, the U.S. has a consistently
below-average rate of income adequacy. Many “independent” young women head single-parent
families in the U.S., and these families have exceptionally high relative poverty rates, both in
comparison with other American families and in comparison with similar households in other
OECD countries (Smeeding 2006, p. 74). Fewer than 10 percent of Italian children live in single
parent units (Giuliano 2006).
In contrast to the bottom panel of Table 5, the bottom panel in Table 6 shows a pervasive
pattern of sizeable decline in young adults’ income adequacy, especially in the youngest age
groups. These results imply that reduced employment rates and wages among young adults
imposed a sizeable penalty on living standards, but the penalty was biggest for young adults who
have already decided to live outside their parents’ households. Interestingly, the decline in
“independent” young adults’ income adequacy was typically smaller in the U.S. than in the other
countries. Among “independent” women between age 26 and 34, income adequacy may have
improved slightly in the U.S. As in the other countries, income adequacy fell most among
“independent” U.S. adults in the youngest age category.
Income adequacy among young adults, irrespective of dependency status . We combine
the results from Tables 5 and 6 in Table 7 to show levels and changes in income adequacy for
the entire population of young adults, regardless of their living arrangements. Of course, the
results reflect the weighted average of the results in the previous two tables. The weights reflect
the relative proportion of adults in each cell who live with their parents and who live
independently of their parents. Taken broadly, the results in Table 7 show that income adequacy
among young adults is lower in the U.S. than it is in Europe, but the U.S.-European gap declined
between the mid-1980s and 1995-2000. U.S. income adequacy comes closest to matching that in
other countries for men in their late 20s and early 30s. The gap between the U.S. and Europe is
larger for younger men and for women. This suggests that between 1986 and 2000 there was
little deterioration in the labor market position of young American adults, at least in comparison
to the deterioration experienced by young men and 18-26 year-old women in continental Europe.
The results in the bottom panel of Table 7 show there was also little deterioration in the income
15
adequacy of households containing young U.S. adults. In contrast, young adults in all the
European countries experienced a decline in income adequacy. In Belgium, Germany, and the
U.K., the deterioration occurred for both genders and in every age group. Young adults in
Canada experienced declines in income adequacy that are roughly in between those that
occurred in the U.S. and Europe.
Summary. These calculations reveal losses in income adequacy across most of the age
groups in nearly all of the countries in our sample. It is worth repeating, however, that the losses
were much bigger among young adults who lived independently of their parents. Young adults
who remained in their parents’ households were partially protected against the drop in living
standards that might be expected to accompany a decline in job opportunities or a loss of wages.
In results not shown, we found that the declines in income adequacy were typically much bigger
among “independent” adults who lived in single-person households. Young adults who lived as
heads or spouses in households containing two or more people saw larger drops in income
adequacy than adults who remained in their parents’ households, but the drop in income
adequacy was typically smaller than the drop experienced by “independent” young adults living
alone. The proportion of young adults who live in one-person households is so small, however,
that we cannot be confident of this result in most countries. We are much more confident of the
finding that the young adults who lived more independently of their parents sustained bigger
losses in income adequacy than the adults who continued to live with their parents.
VI. Discussion and Conclusion
The results in our paper suggest there has been a decline in the ability of young adults to
form independent households over the 15 year period leading up to 2000. At the same time, there
has been an actual postponement in establishing independent households, indicating a ‘failure to
launch.’ What evidence supports this conclusion? Our calculations offer a generally consistent
picture of declining economic self-sufficiency among young men and very young women in the
countries in our sample. In contrast, women in their late 20s or early 30s have improved
prospects for economic independence, although from a starting level that was well below that
observed among men of the same age. North America and to some extent the U.K. offer partial
exceptions to this general pattern. Between the mid-1980s and 2000 employment rates improved
among young Americans in their late 20s and early 30s, and earnings levels either remained
16
stable or increased modestly. The stability of U.S. employment levels helped to offset an
apparent reduction in male hourly wage rates, giving 26-34 year-old American men larger gains
or smaller losses in economic self-sufficiency than experienced by their counterparts in
continental Europe. In addition, young women in the U.S. who were 26 and older saw bigger
improvements in wage self-sufficiency than most of their counterparts in continental Europe.
A striking finding of this study is that while income adequacy among young adults
typically declined over the analysis period, the declines were biggest among those adults who
resided outside the households of their parents. These losses were especially large among the
youngest adults in independent households. Young adults who lived with their parents suffered
smaller losses in relative incomes, possibly because their loss of potential wage earnings
represented a small percentage of net household income or was offset by income gains by their
parents. These findings suggest that the extended family as well as the state is a source of
income protection that buffers young adults against the full effects of an economic reverse (for
Italian evidence on this issue, see Manacordia and Moretti 2002). Delayed departure from a
parent’s household is a plausible response to deterioration in a child’s economic prospects.
Several issues are beyond the scope of our paper but which should be considered when
interpreting our findings. The cross-national pattern of employment, earnings, and income gains
and losses is almost certainly affected by the entry of immigrants as well as young adults into the
workforce. The highest immigrant countries we study are the United States and Canada,
followed by the U.K., Germany and then Italy and Belgium. There are not enough immigrant
youth in some of these countries to separately analyze them in this chapter. However, we know
that the United States has had much more low-skill than high-skill immigration compared with
Canada and the U.K., where a larger percentage of immigrants bring average or above-average
skills upon entry into the country. We suspect that high rates of unskilled immigration into the
United States have had a modestly depressing effect on wages for low-skill native U.S. workers,
including many of the young adults we study here (Borjas and Katz 2005). The cross-national
effects of immigration on the transition to independence must be the topic of separate analysis,
however (for more on recent issue related to EU immigration, see Parsons and Smeeding 2006).
An optimistic interpretation of our findings is that young adults have postponed the
formation of independent households because they are accumulating more education than earlier
generations. By spending more time in school they are delaying financial independence and
17
temporarily giving up labor income, but they are improving their capacity to earn good wages in
the future. Figure 2 shows the OECD’s latest statistics on school completion rates in the six
countries in our survey. The top panel shows the percentages of successive age groups that have
completed upper secondary education; the bottom panel shows percentages completing tertiary
education. The information displayed in the chart compares schooling attainment rates among
25-34 year-olds with attainment rates among 35-44 year-olds in each nation. If young adults are
accumulating more schooling than earlier cohorts, we would expect to see higher educational
attainment rates in the younger age group compared with the older group for both secondary and
tertiary education. This expectation is confirmed in all countries except Germany and the U.S.,
where schooling attainment of the younger cohort is the same as or lower than that in the older
cohort.13
The Canadian and U.S. attainment statistics are affected by the high rates of immigration
into those countries mentioned earlier. The impact of immigration on average schooling is
probably greater in the U.S. than in Canada, because a large fraction of U.S. immigrants arrives
with very little schooling and has difficulty speaking or writing English. In contrast, Canadian
policy strongly favors immigrants who are well educated and fluent in either English or French.
In spite of these caveats, we see little evidence in Figure 2 that young adults in either Germany,
or the U.S. are experiencing employment or earnings losses because they are devoting more
effort to completing a high school or college education (in Italy as well). An education-based
interpretation of the trends in employment, earnings, and the age of financial independence may
be valid for the countries in our sample where attainment levels are rising – Belgium, Canada,
Italy, and the U.K. But rising school attainment does not appear to explain the delay in
economic self-sufficiency--the ‘failure to launch’--among young adults in Germany, Italy or the
U.S.
18
NOTES
1 The database does not always include information on each household member’s labor
earnings, employment status, or usual paid hours of work, however. This is one reason our
analysis focuses on just 6 out of the 30 LIS countries. To be included in our sample of countries,
a nation’s LIS survey information had to meet minimum requirements. First, information from
an identical or very similar survey instrument was needed for two points in time, one around the
middle of 1980s and a second after the mid-1990s. Second, the LIS database had to contain
information about the individual labor earnings of adults who head households as well as those
adult household members who are not heads. For instance, the LIS labor force data do not
necessarily cover a consistent reference period across all of the countries in our sample.
2 In the six countries examined here, we measure a person’s capacity for economic
independence by his or her labor income. The early LIS data on labor earnings are subject to a
important limitation, however. The LIS datasets from the mid-1980s contain information on
individuals’ wage and salary earnings, but data on self-employment income are only available at
the household level. In the later LIS datasets, self-employment income, as well as wage and
salary earnings, is available for individuals. In order to create comparable measures of labor
earnings for both periods, we confined our analysis to wage and salary income. We also present
information showing how this limitation may affect our findings. While it would be desirable to
find or create data sets that include reliable information on both income and work hours, we
were unable to identify comparable data files that cover a broad cross-section of countries. Thus,
at this point, the LIS surveys are the best microscope available for examining these differences in
cross national perspective.
3 In Italy, spouses cannot be distinguished from partners of the household head in one of the
two surveys. Therefore, our classification of Italian spouses should be understood to include
both spouses and partners of the household head.
4 The survey used in the four EU member countries is Eurostat’s quarterly Labour Force
Survey; in Canada, it is the monthly Labour Force Survey; and in the United States, it is the
monthly Current Population Survey. Eurostat, Statistics Canada, and the U.S. Bureau of Labor
Statistics define the employment-population ratio in very similar but not identical ways. All
employment statistics were obtained from the internet sites of the Eurostat, Statistics Canada,
and U.S. BLS.
5 Unfortunately, Eurostat has not published employment data by age group for western
Germany since the early 1990s. Therefore, the German data in Table 2 refer to West Germany in
1985 and to unified Germany in 1995-2005. We show employment rates for a single year, 1985,
in the mid-1980s but for three separate years between 1995 and 2005. For some countries the
1995 data will cover a reference period that is close to the second LIS survey we analyze. For
other countries, the 2000 data will be more comparable
6 We chose 1/2 , a common value used in research on household income, because it
represents the halfway point between two extreme assumptions about the economies of scale that
individuals achieve when they live in larger households.
7 Although it would be preferable to measure each worker’s total labor income, including
self-employment as well as wage and salary earnings, self-employment income is not separately
19
recorded in the LIS data files in the mid-1980s. Because the calculations do not include self-
employment income, they understate young adults’ total labor income in all the countries. The
exclusion of self-employment earnings is more important in Italy than it is in other countries,
because a relatively large percentage of young Italians is self-employed and the income they
derive from such employment is significant To calculate the potential importance of self-
employment earnings, we tabulated labor earnings in 2000 using two definitions, one that
included and a second that excluded a person’s self-employment income. We performed the
calculations for Germany, Italy, and the U.S. Self-employment income did not contribute
materially to the earned incomes of very young people in any of the countries nor to the incomes
of U.S. men and German and U.S. women, regardless of their age. However, including self-
employment income in the earnings definition boosts earnings of 26-34 year-old German men by
about 10 percent. The effect on earnings of Italian men and women is much greater. Between
ages 30 and 34 the measure of net earnings that includes net self-employment income is about 40
percent larger than a definition that includes only net wage and salary income. For this reason
any analysis that excludes self-employment earnings will seriously understate the relative
incomes of Italians who are age 25 or older.
8 Because employment rates changed between the two surveys, this calculation does not
compare the earnings levels of two identically selected populations. If the employment rate fell
between the first and second surveys, the population included in the calculation for the second
year may differ in many ways from the population included in the first-year sample. For
example, if the percentage of young adults at work declined because of higher enrollments in
post-secondary education, the sample of wage earners in the later year may exclude some of the
most able adults who would have held jobs in the absence of an enrollment rise. A fall in
average wage levels in the bottom panel of Table 3 cannot be interpreted as unambiguous
evidence that wages available to young people have declined. Instead it may partly reflect the
change in the composition of the employed population.
9 The tabulations are biased against Italy for another reason as well. Self-employment
income is more important for young people in that country than it is in the other four. Since data
limitations prevent us from including self-employment earnings in the calculations, the results
seriously underestimate the labor incomes of Italians.
10 For this reason, we have only fragmentary information on how much income would
follow a dependent adult if he or she established an independent household. Even if this income
amount were known, we would still need to ascertain how much taxes would be paid and how
much public transfers would be received by the new household. The calculation is even more
formidable if we also wanted to account for the potential earnings and other income of a
hypothetical spouse or partner.
11 Although the living arrangements of adults who are neither heads nor parental dependents
vary widely, we assume that on balance the people in this group are more independent of their
parents than young adults who live in their parents’ homes.
12 Note that since our calculations are based on households’ after-tax and after-transfer
incomes, the results are comparable across all six countries, including both Belgium and Italy.
20
We also performed the calculations using a higher income threshold to measure income
adequacy, but the pattern of results was similar to that displayed in Tables 6 - 8.
13 The German findings are undoubtedly affected by German unification. Our income and
earnings analysis has focused on residents of western Germany, but the education statistics show
attainment levels for all of Germany. It is conceivable that young west Germans have
accumulated more schooling than older cohorts even though the national-level statistics do not
reflect these gains.
21
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22
Table 1. Employment-Population Ratio by Gender and Age in Six Countries, 1985-2005
Percent
Males Females
Year
15-19 20-24 25-29 30-34 15-19 20-24 25-29 30-34
Belgium
1985 11 59 88 91 9 48 62 58
1995 6 49 85 89 3 43 70 69
2000 10 55 85 91 6 44 76 74
2005 9 50 83 87 5 43 75 75
1985-2005 -2 -9 -5 -4 -4 -4 13 17
Germany a/
1985 41 70 82 90
35 65 59 54
1995 32 68 80 89
26 64 67 66
2000 33 67 81 89
26 63 70 71
2005 28 60 74 85
22 58 65 67
1985-2005 -13 -11 -7 -5
-13 -7 6 13
Italy
1985 21 59 83 94 14 38 47 49
1995 15 45 71 86 8 31 47 50
2000 13 46 69 86 8 34 49 55
2005 11 49 73 86 5 35 54 62
1985-2005 -11 -10 -10 -8 -9 -3 7 13
United Kingdom
1985 46 74 84 87 45 61 54 53
1995 39 70 83 86 39 62 67 65
2000 43 75 88 89 43 66 72 71
2005 38 74 87 89 40 65 73 73
1985-2005 -8 -1 3 3 -5 4 19 19
Canada
1985 44 71 82 85
44 66 65 62
1995 41 68 80 83
41 65 69 69
2000 43 71 84 87
44 68 75 75
2005 43 70 84 88
47 70 76 77
1985-2005 -1 -1 2 2
3 4 11 15
United States b/
1985 46 75 87 90 43 64 66 65
1995 45 75 87 89 44 64 70 71
2000 45 77 89 91 45 68 73 73
2005 35 71 86 89 38 65 69 70
1985-2005 -11 -4 -1 -1 -5 0 4 5
a/ Data are for western Germany in 1985 and for unified Germany in 1995-2005.
b/ Youngest age group in the United States is 16-19 years old.
Sources: For EU member countries, Eurostat Labour Force Survey; for Canada, Statistics Canada; for the United States,
U.S. BLS.
Table 2. Educational Attainment Expressed in Average Number of Years in
Formal Education, Persons Age 25-34 in 2002-03
Country Males Females
Belgium 12.4 12.7
Germany 13.5 13.4
Italy
11.2 11.6
United Kingdom 13.1 13.0
Canada 13.6 14.1
United States 13.7 14.0
Source: OECD. See www.oecd.org/edu/eag2005.
Table 3. Mean Wage and Salary Earnings of Young Adults in Six Countries, 1984-2000
Percent of median national ADPI a/
Country Year Males Females
18-22 22-26 26-30 30-34 18-22 22-26 26-30 30-34
Earlier Period
Belgium b/ 1985 28 67 103 117 20 50 57 58
W.Germany 1984 47 92 147 191 34 68 71 67
Italy b/ 1987
18 51 83 91 17 32 39 45
UK 1986
67 113 132 149 51 66 51 51
Canada 1987
43 83 108 132 31 60 65 64
USA 1986
40 87 124 144 28 56 69 69
Later period
Belgium b/ 1997 13 50 71 84 9 40 55 54
W.Germany 2000 32 70 108 148 26 54 69 72
Italy b/ 2000
17 39 49 69 11 30 40 41
UK 1995
47 88 123 146 39 65 72 71
Canada 1997
34 74 101 121 24 52 69 72
USA 2000
35 81 122 146 28 59 80 83
Percent change between earlier and later period c/
Belgium b/ 1985-1997 -52 -26 -31 -28 -54 -20 -3 -7
W.Germany 1984-2000 -33 -24 -26 -22 -22 -21 -2 7
Italy b/ 1987-2000
-6 -23 -40 -24 -38 -7 2 -9
UK 1986-1995
-30 -22 -7 -2 -23 -2 41 39
Canada 1987-1997
-21 -10 -6 -8 -22 -14 7 12
USA 1986-2000
-13 -7 -2 1 -2 6 16 19
Memo: Percent change in average earnings of young adults who have wage and salary earnings.
Percent change between earlier and later period c/
Belgium b/ 1985-1997 -25 -14 -18 -22 -23 -11 -15 -17
W.Germany 1984-2000 -33 -30 -26 -24 -24 -18 -10 -11
Italy b/ 1987-2000
-20 -28 -26 -18 -29 -19 -22 -16
UK 1986-1995
-19 -14 1 -1 -15 -7 4 11
Canada 1987-1997
-11 -6 -2 -3 -13 -11 5 9
USA 1986-2000
-8 -5 -2 -2 2 4 10 9
a/ ADPI is adjusted personal disposable income.
b/ Wage and salary income is measured net of income and payroll tax payments.
c/ Change in earnings between earlier and later period divided by the level of earnings in the earlier period.
Source: Authors tabulations of LIS files.
Table 4. Fraction of Adults with Wage and Salary Earnings above 50 Percent of the National Median ADPI in Six
Countries, 1984-2000
Percent
Males Females
Country Year
18-22 22-26 26-30 30-34 18-22 22-26 26-30 30-34
Earlier period
Belgium b/ 1985 29 64 86 88 23 53 57 55
W.Germany 1984 30 67 79 84 25 57 51 48
Italy b/ 1987 16 41 61 64 16 27 32 37
UK 1986 56 70 71 69 50 52 35 33
Canada 1987 34 63 74 78 23 52 51 49
USA 1986 29 66 77 79 22 46 53 52
Later period
Belgium b/ 1997 16 55 73 81 11 46 62 57
W.Germany 2000 21 50 70 80 19 44 48 49
Italy b/ 2000 16 40 47 59 12 33 42 38
UK 1995 42 62 65 69 38 50 48 43
Canada 1997 22 55 69 73 15 41 54 54
USA 2000 27 63 79 81 20 49 59 58
Percentage-point change
Belgium 1985-1997 -13 -9 -13 -8 -12 -6 5 2
W.Germany 1984-2000 -9 -17 -10 -4 -6 -13 -3 1
Italy 1987-2000 0 -1 -15 -5 -4 6 9 1
UK 1986-1995 -14 -8 -6 -1 -13 -2 13 10
Canada 1987-1997 -12 -8 -5 -6 -9 -11 3 4
USA 1986-2000 -2 -4 1 2 -2 3 6 5
a/ ADPI is adjusted personal disposable income.
b/ Wage and salary income is measured net of income and payroll tax payments.
Source: Authors' tabulations of LIS files.
Table 5. Percent of Parental Dependents Who Have Adjusted Disposable Incomes above 50 Percent of the National
Median ADPI, 1984-2000 a/
Percent
Males Females
Country Year 18-22 22-26 26-30 30-34 18-22 22-26 26-30 30-34
Earlier Period
Belgium 1985 99 97 98 100 97 98 97 94
W. Germany 1984 96 99 99 100 96 97 91 85
Italy 1987 86 87 90 81 87 89 92 88
UK 1986 98 96 95 98 95 98 94 88
Canada 1987 94 96 95 95 92 94 94 99
USA 1986 87 90 88 83 85 91 88 84
Later Period
Belgium 1997 95 95 97 97 94 96 99 87
W. Germany 2000 96 99 90 98 97 96 92 97
Italy 2000 87 93 90 92 87 89 92 87
UK 1995 92 95 96 92 94 97 96 100
Canada 1997 90 93 95 97 91 95 94 96
USA 2000 88 91 90 89 88 91 90 87
Percentage-point change
Belgium 1985-1997 -4 -2 -2 -3 -3 -2 2 -7
W. Germany 1984-2000 0 0 -9 -2 1 -1 1 12
Italy 1987-2000 1 6 0 11 0 -1 -1 -1
UK 1986-1995 -5 -1 1 -5 -1 -1 2 12
Canada 1987-1997 -4 -2 0 1 -1 1 0 -4
USA 1986-2000 1 1 2 6 3 -1 2 2
a/ “Parental dependents” are young adults who live in a household headed by their parent or step-parent. ADPI is
adjusted personal disposable income.
Source: Authors' tabulations of LIS files.
Table 6. Percent of Household Heads, Spouses, and Other Independent Young Adults Who Have Adjusted
Disposable Incomes above 50 Percent of the National Median ADPI, 1984-2000 a/
Percent
Males Females
Country Year 18-22 22-26 26-30 30-34 18-22 22-26 26-30 30-34
Earlier Period
Belgium 1985 82 92 96 97 86 93 96 96
W. Germany 1984 84 86 90 96 67 82 92 93
Italy 1987 84 85 91 89 91 86 88 91
UK 1986 84 90 90 91 83 86 87 89
Canada 1987 79 85 89 93 72 83 85 89
USA 1986 71 85 87 88 68 76 80 81
Later Period
Belgium 1997 80 77 86 93 78 87 90 90
W. Germany 2000 71 70 87 91 55 71 85 90
Italy 2000 77 81 83 88 80 71 84 87
UK 1995 76 84 88 88 72 78 82 84
Canada 1997 66 87 85 89 61 78 85 87
USA 2000 71 80 87 87 67 75 80 82
Percentage-point change
Belgium 1985-1997 -1 -16 -10 -4 -9 -6 -6 -5
W. Germany 1984-2000 -13 -16 -3 -4 -12 -11 -7 -3
Italy 1987-2000 -7 -4 -8 -1 -11 -15 -4 -4
UK 1986-1995 -8 -6 -2 -3 -11 -8 -6 -4
Canada 1987-1997 -13 2 -4 -4 -11 -5 0 -2
USA 1986-2000 0 -5 -1 -1 -1 0 0 1
a/ “Household heads, spouses, and other independents” are young adults who do not live in a household headed by
their parent or step-parent. ADPI is adjusted personal disposable income.
Source: Authors' tabulations of LIS files.
Table 7. Percent of Young Adults Who Have Adjusted Disposable Incomes above 50 Percent of the National
Median ADPI, 1984-2000 a/
Percent above the poverty line
Males Females
Country Year
18-22 22-26 26-30 30-34 18-22 22-26 26-30 30-34
Earlier period
Belgium 1985 97 95 97 97 94 95 96 95
W.Germany 1984 94 92 92 96 88 86 92 93
Italy 1987 86 86 91 87 87 88 90 91
UK 1986 94 92 91 92 90 89 88 89
Canada 1987 91 89 90 93 85 86 86 90
USA 1986 83 87 87 87 78 79 81 81
Later period
Belgium 1997 94 88 89 93 91 91 92 90
W.Germany 2000 91 83 88 92 83 78 86 90
Italy 2000 86 91 88 90 86 85 88 87
UK 1995 87 88 89 88 83 82 83 85
Canada 1997 85 90 88 89 81 84 86 87
USA 2000 82 83 87 87 79 79 81 82
Percentage-point change
Belgium 1985-1997 -3 -7 -8 -4 -4 -4 -4 -5
W.Germany 1984-2000 -3 -8 -4 -4 -4 -8 -6 -3
Italy 1987-2000 0 5 -2 3 -1 -3 -2 -4
UK 1986-1995 -7 -4 -1 -4 -7 -7 -5 -4
Canada 1987-1997 -5 1 -3 -4 -4 -2 0 -2
USA 1986-2000 0 -4 0 0 1 -1 0 1
a/ ADPI is adjusted personal disposable income.
Source: Authors' tabulations of LIS files.
Figure 1. Percent of Young Adults Who Are Household Heads by
Age and Gender, 1995-2000
Males
0
10
20
30
40
50
60
70
80
90
100
18-22 19-23 20-24 21-25 22-26 23-27 24-28 25-29 26-30 27-31 28-32 29-33 30-34
UK
USA
Can
Ger
Bel
Ita
Females
0
10
20
30
40
50
60
70
80
90
100
18-22 19-23 20-24 21-25 22-26 23-27 24-28 25-29 26-30 27-31 28-32 29-33 30-34
UK
Can
USA
Ger
Bel
Ita
Source: Authors’ tabulations of LIS database.
Source: OECD (2005).
Figure 2. Population that Has Attained at Least Upper Secondary or Tertiary
Education in Six Countries, 2002-2003
Percent of age group that has
completed tertiary education
10
15
20
25
30
35
40
45
50
55
01234567
25-34 yr-olds
35-44 yr-olds
Belgium Canada Germany Italy UK USA
Percent of age group that has
completed upper secondary education
45
50
55
60
65
70
75
80
85
90
95
01234567
25-34 yr-olds
35-44 yr-olds
Belgium Canada Germany Italy UK USA
APPENDIX
Young adults are divided into four overlapping age groups in Appendix Table A-1 .The top
panel of the table shows the percentage of men and women in each age group who were
household heads or spouses in the1980’s wave of the LIS surveys, while the middle panel shows
identical tabulations of headship status in the later LIS survey. The bottom panel shows the
difference between headship rates in the 1995-2000 period and the mid-1980s
Appendix Table A-1 - BELOW
Appendix Table A1. Fraction of Persons Who Are Household Heads or Spouses of Household
Heads in Six Countries, 1984-2000
Percent
Males Females
Country Year
18-22 22-26 26-30 30-34 18-22 22-26 26-30 30-34
Earlier period
Belgium 1985 9 43 82 92 17 61 84 90
W.Germany 1984 11 53 81 92 21 66 87 94
Italy 1987 1 8 47 74 6 37 67 80
UK 1986 19 57 84 92 35 72 88 94
Canada 1987 17 50 73 87 30 65 84 91
USA 1986 15 51 75 85 28 64 82 90
Later period
Belgium 1997 6 36 71 88 10 47 73 88
W.Germany 2000 12 50 82 92 24 60 77 88
Italy 2000 2 7 27 54 6 17 49 79
UK 1995 18 53 81 92 37 74 91 95
Canada 1997 16 44 69 84 27 59 81 90
USA 2000 17 50 71 81 26 61 79 86
Percentage-point change
Belgium 1985-1997 -3 -8 -10 -4 -6 -15 -11 -3
W.Germany 1984-2000 0 -3 0 0 3 -5 -10 -6
Italy 1987-2000 1 -1 -20 -20 0 -20 -17 -1
UK 1986-1995 -1 -4 -3 0 1 2 2 2
Canada 1987-1997 -1 -6 -4 -3 -3 -6 -3 -1
USA 1986-2000 1 -1 -4 -3 -2 -4 -4 -4
Source: Authors' tabulations of LIS files.
... There are many factors influencing this extension of adolescence, such as young people spending more years pursuing education and taking longer to establish careers. Other factors, including unstable employment, low wages, and high housing costs also affect the transition to financial independence (Bell, Burtless, Gornick, & Smeeding, 2007). This period of development is fundamentally unique from both adolescence and full independent adulthood. ...
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