December 2013

IZA DP No. 7877: Explaining Well-Being over the Life Cycle: A Look at Life Transitions during Young Adulthood

Early adulthood is a time of important transitions that shape the future of young adults. How do these transitions affect well-being, and to what degree can they account for the life satisfaction path followed during young adulthood? To answer these questions, longitudinal data from the Swedish Young Adult Panel Study are used for three cohorts interviewed in 1999, 2003, and 2009. Four age intervals covering ages 22 through 40 are constructed. The well-being changes and the main transitions undergone during each age interval are examined. Life satisfaction at ages 22 to 40 follows a slight inverse U-shape peaking around age 30/32 and declining thereafter. The common transition pattern during this time is represented by young adults ages 22 through 30/32 going mainly through partnership (marriage or cohabitation) formation, the school-to-work transition, and the early years of parenting. After age 30 parenting continues as an important life transition, and is joined by an increase in partnership dissolution. This set of transitions alone is found to account for the inverse U-shape of overall life satisfaction. Partnership formation, the school-to-work transition, and parenting younger children are all associated with increasing life satisfaction, mainly through their positive relationship with the financial, and family domains of well-being. After age 30, the monetary burdens, and strains on relationship with partner associated with parenting older children start to set in, and life satisfaction begins to decline.