Parents' economic support of young-adult children: Do socioeconomic circumstances matter?

We assess how the support parents provide to young adults as they leave school and begin working is related to their family's socioeconomic circumstances. We do this using an innovative Australian data set which merges survey and administrative data. The survey data inform us about intergenerational co-residence and financial gifts and the administrative data about the family's welfare receipt history. We find that disadvantaged young people are more likely to be economically independent of their parents than are their more advantaged peers. This disparity is larger for financial gifts than for co-residence and increases with age. Moreover, there is a complex relationship between parental support and participation in study and work. We find no evidence, however, that a lack of parental support is the source of the socioeconomic gradient in either studying or employment. These results are important in eliminating one potential pathway through which socioeconomic disadvantage limits young people's outcomes.