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Concerns have arisen over the impacts on young adults' employment, income, wealth, and living arrangements, and about whether these young adults constitute a "scarred generation" that will suffer permanent contractions in financial well-being. If true, knowing the mechanisms through which young adults' finances have been affected has important implications for policy measures that could improve the financial well-being of today's young adults in the present and future. Key findings Pros In the Great Recession, young adults in most countries experienced disproportionately high unemployment rates. Entering adulthood during a recession results in persistent declines in earnings. Young adults experienced large declines in net worth in the Great Recession, attributable to declining assets and rising debt. Declines in home and stock ownership among young adults may lead to persistent declines in net worth. Rates of co-residence with parents increased among young adults in the Great Recession, which is partly attributable to borrowing constraints due to elevated debt-holding. Cons Entering adulthood during a recession often leads to increased schooling, which could boost earning power in the future. Young adults experienced smaller declines in net worth than slightly older adults because they were less invested in housing and stock markets. Depressed rates of home ownership are not permanent, and ownership gaps typically narrow later in life. At the same age, young adults in the current cohort have higher asset ownership rates and are less likely to experience financial distress than young adults who came of age around 1989. Author's main message During the Great Recession, young adults experienced elevated unemployment rates, lower earnings, reduced net worth, lower rates of home ownership, and higher rates of co-residence with parents. The evidence indicates that entering adulthood during a recession can lead to persistent declines in earnings and net worth, although some indicators suggest that young adults may be able to catch up later in life. Understanding the economic experiences of young adults is critical for guiding public policies aimed at improving their financial well-being in the present and future. Download full article (PDF) This article first appeared on IZA World of Labor in April 2016. Reproduced with permission Tweet July 19, 2016 Print Article(s) by this author Effects of entering adulthood during a recessionRecent declines in youth employment, net worth, and family formation could permanently affect financial well-being July 19, 2016［From IZA］ Articles Column Special Series Newspapers & Magazines Fellows' Works VoxEU Column From IZA Perspectives from Around the World Other Contents RIETI Report Policy Update Keizai Sangyo Journal Communications Newsletter RSS Feed Facebook X YouTube Research Areas Research Programs (FY2024-2028) Research Programs (FY2020-2023) Research Programs (FY2016-2019) Research Programs (FY2011-2015) Policy Research Domains (FY2006-2010) Projects Survey Fellows Research/Policy Papers Discussion Papers (English) Discussion Papers (Japanese) Policy Discussion Papers (English) Policy Discussion Papers (Japanese) Technical Papers (English) Technical Papers (Japanese) Non Technical Summaries List of Articles in Journals Research Digest Discussion Papers Search Publications RIETI Books (English) RIETI Books (Japanese) History of Japan's Trade and Industry Policy Authors' Words Other Publications (English) Other Publications (Japanese) Events Symposiums Workshops BBL Seminars Archived Seminar Series Data JIP Database R-JIP Database CIP Database Industry-Specific Nominal and Real Effective Exchange Rates AMU and AMU Deviation Indicators JSTAR RIETI-TID RIETI FDI Database ICPA Project Links Articles Column Special Series Newspapers & Magazines Fellows' Works VoxEU Column From IZA Perspectives from Around the World Other Contents RIETI Report Policy Update Keizai Sangyo Journal (METI Journal) About RIETI Privacy Policy Site Policy Site Map Help Contact METI Web Site Research Institute of Economy, Trade and Industry, IAA (JCN 6010005005426)JCN: Japan Corporate Number Opinions expressed or implied on this website are solely those of the author, and do not necessarily represent the views of the Research Institute of Economy, Trade and Industry (RIETI).Titles, numbers, specific names, etc. on this website are as of the date of publication. 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