Income Sharing Between Parents and Young People Living at Home

Abstract

Since the 1970s, changes in the Australian labour market, education and income policies have led to reductions in income for young people aged 15 to 24 years. Young people today are therefore more reliant on their parents sharing income with them. This paper presents the results of original research that shows how parents share, or ‘pool’ their income with young people living at home. Australian household expenditure data is examined using new and extended methods to show how different levels of income received by young people and their parents affects expenditure on themselves and other family members. It is found that on average, young peoples’ consumption of basic food items is unaffected by their level of personal income indicating that parents pool income for these items. However, in low-income families, young people are more likely to consume luxury food items if they have higher personal incomes suggesting less pooling by parents. It is also found that regardless of levels of parental income, young peoples’ consumption of adult goods such as alcohol and cars is restricted unless they have incomes of their own.