A Nest or a Golden Cage: Family Coresidence, Human Capital Investment and Labour Market Decisions of Young Adults

Household arrangements and human capital investment decisions of young Italians with a high school diploma are analysed. A model of the choices of residing with parents or forming a new family, jointly with those of investing in either work experience, or further education, or stopping investment is estimated. The results show that family background has a major impact on the decision to study, housing costs induce co-residence, and unemployment increases the probability of studying. Education policies subsidising university studies on a merit ground would thus reduce income inequality, housing allowances would favour marriage, and labour policies would have the side-effect of decreasing university dropouts.