The Effect of Unemployment on Household Composition and Doubling Up

April 2011

Emily E. Wiemers, University of Michigan

Download 'working_paper11-12.pdf'.

Abstract

Doubling up with family and friends is one way in which individuals and families can cope with job loss but there is little work on how prevalent this form of resource sharing is and to what extent families use co-residence to weather a spell of unemployment. This project uses data from the Survey of Income and Program Participation to provide some of the first evidence on the relationship between household composition and unemployment across working ages. I show that households with at least one unemployed person are fifty percent more likely to be doubled up than households in which no one is unemployed. Using the transitions in living arrangements and employment status in the SIPP panels, I find that individuals who become unemployed are twice as likely to move in with others but that they are 25 percent less likely to have others move in with them. I further show that young adults are the most likely to move in with others when they become unemployed but that middle aged adults also seem to use co-residence as a way to weather spells of unemployment. Moving into shared living arrangements in response to unemployment is not evenly spread across SES; it is most prevalent among the lowest and highest SES individuals. The issue of how families change household composition to weather bad economic times is especially relevant as unemployment rates remain historically high. Because family composition interacts in important ways with benefit receipt, understanding how families alter living arrangements to respond to bad economic conditions has important implications for the effectiveness of programs designed to alleviate poverty.

Keywords:
Employment, Unemployment, and the Labor Market, Marriage, Family Formation and Reproductive Issues