Non-Technical Summary:
Australia is currently undergoing a well-documented housing affordability crisis. There have been a lot of discussions around the fast rise in housing prices (both for rentals and purchases), the shortage of affordable housing for low-income families and the inequalities induced by the negative gearing system to cite just a few examples. Single parents are especially under intense financial stress and at greater risk of housing insecurity and possibly homelessness.
With that context in mind, how do low-income families cope when the family breaks down and two accommodations now have to be paid for instead of one? Are some pushed down the housing ladder to the point of homelessness?
To answer this question, we use a unique dataset of disadvantaged Australians (Journeys Home, JH). Importantly, 62% of JH respondents (who have experienced homelessness) believe that family breakdown or conflict is what led them to be homeless the first time.
To determine whether respondents’ parents’ separation (if ever) led to their first experience of homelessness (if ever), we exploit JH’s detailed information on whether and when their parents separated and whether and when they “stayed in any […] places because [they] did not have a place to live”. We then define homelessness as sleeping rough or squatting in abandoned buildings; staying with relatives or friends temporarily with no alternative; staying in a caravan park, boarding house, hotel or crisis accommodation. We use a broad definition of homelessness which seeks to identify situations in which families’ housing conditions do not meet standard requirements to qualify as a decent ‘home’.
We find that parental separation increases the likelihood of becoming homeless conditional on observed and unobserved (family and individual) characteristics. The effect is substantial. For boys, parental separation increases the likelihood of becoming homeless by age 30 by 10-15 percentage points. This is irrespective of the age they were when the separation occurred. For girls, only parental separation occurring before they were 12 years old increases the likelihood of homelessness before 30 by 15-20 percentage points.
The effects on homelessness are larger when the parents were formally married prior to the separation.
These results constitute a critical first step in understanding how individuals, and in particular children or young adults, become homeless. In particular, they highlight the role of parental separation in that process and hence the necessity to address the issue of housing affordability for disadvantaged families that breakdown in order to protect children from poverty and homelessness.