This paper examined whether the greater average schooling and employment, and lower parenting competence, of young mothers who reside with adult relatives reflect preexisting differences versus potential causal mechanisms. The sample included 554 young mothers (ages 13 to 25; nearly two thirds African American) from the Infant Health and Development Program (IHDP) a random-assignment intervention study of premature, low birth weight babies followed 8 times from birth to age 3. Ordinary least squares, fixed-effects, and random-effects models indicated that young mothers of low birth weight babies sorted into extended households based on preexisting characteristics that were correlated with their lower parenting skills and knowledge. In contrast, coresidence predicted greater schooling or employment across models, with some variations for different subgroups.