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How Do Mortgage Subsidies Affect Home Ownership? Evidence from the Mid-century GI Bills

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  • Daniel K. Fetter

Abstract

The largest twentieth-century increase in US home ownership occurred between 1940 and 1960, associated largely with declining age at first ownership. I shed light on the contribution of coincident government mortgage market interventions by examining home loan benefits granted under the World War II and Korean War GI Bills. Veterans' benefits increased home ownership rates primarily by shifting purchase earlier in life, explaining 7.4 percent of the overall 1940-1960 increase, and 25 percent of the increase for affected cohorts. A rough extrapolation suggests that broader changes in mortgage terms can explain 40 percent of the 1940-1960 increase. (JEL G21, N22, N92, R21, R31)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 5 (2013)
Issue (Month): 2 (May)
Pages: 111-47

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Handle: RePEc:aea:aejpol:v:5:y:2013:i:2:p:111-47

Note: DOI: 10.1257/pol.5.2.111
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Cited by:
  1. Kimbrough, Gray, 2013. "The Educational Legacy of the Greatest Generation: Paternal Military Service and Baby Boomer Educational Progress," Working Papers 13-16, University of North Carolina at Greensboro, Department of Economics.
  2. Daniel K. Fetter, 2013. "The Home Front: Rent Control and the Rapid Wartime Increase in Home Ownership," NBER Working Papers 19604, National Bureau of Economic Research, Inc.
  3. Daniel K. Fetter, 2013. "The Twentieth-Century Increase in U.S. Home Ownership: Facts and Hypotheses," NBER Chapters, in: Housing and Mortgage Markets in Historical Perspective, pages 329-350 National Bureau of Economic Research, Inc.
  4. Boustan, Leah P. & Margo, Robert A., 2013. "A silver lining to white flight? White suburbanization and African–American homeownership, 1940–1980," Journal of Urban Economics, Elsevier, vol. 78(C), pages 71-80.
  5. Agarwal, Sumit & Hu, Luojia & Huang, Xing, 2013. "Rushing into American Dream? House Prices, Timing of Homeownership, and Adjustment of Consumer Credit," Working Paper Series WP-2013-13, Federal Reserve Bank of Chicago.

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