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What are the social benefits of homeownership? Experimental evidence for low-income households

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  • Engelhardt, Gary V.
  • Eriksen, Michael D.
  • Gale, William G.
  • Mills, Gregory B.

Abstract

We estimate the social benefits of homeownership using an exogenous instrument based on randomly assigned treatment status from a field experiment that subsidized saving for home purchase for low-income renters through Individual Development Accounts (IDAs). This approach attempts to eliminate the potential correlation present in previous analyses between unobserved individual characteristics leading to homeownership and traits leading to provision of social capital or local amenities. Consistent with previous work, we show that homeownership positively affects political engagement in simple probits. Instrumental variable probits, however, show no impact of homeownership on political involvement. IV results for other social outcomes are less conclusive. The analysis suggests that with the use of an exogenous instrument, it is possible to generate results that are different from the previous literature. Our results also suggest that being eligible to open an IDA did not spur households to provide more social capital or local amenities.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 67 (2010)
Issue (Month): 3 (May)
Pages: 249-258

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Handle: RePEc:eee:juecon:v:67:y:2010:i:3:p:249-258

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Web page: http://www.elsevier.com/locate/inca/622905

Related research

Keywords: Homeownership Social benefits;

References

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  1. Michiel van Leuvensteijn & Pierre Koning, 2004. "The Effect of Home-ownership on Labor Mobility in The Netherlands," Working Papers 04-01, Utrecht School of Economics.
  2. Harvey S. Rosen, 1985. "Housing Subsidies: Effects on Housing Decisions, Efficiency, and Equity," NBER Working Papers 1161, National Bureau of Economic Research, Inc.
  3. Aaronson, Daniel, 2000. "A Note on the Benefits of Homeownership," Journal of Urban Economics, Elsevier, vol. 47(3), pages 356-369, May.
  4. Munch, Jakob Roland & Rosholm, Michael & Svarer, Michael, . "Are Home Owners Really More Unemployed?," Economics Working Papers 2003-15, School of Economics and Management, University of Aarhus.
  5. Dietz, Robert D. & Haurin, Donald R., 2003. "The social and private micro-level consequences of homeownership," Journal of Urban Economics, Elsevier, vol. 54(3), pages 401-450, November.
  6. Engelhardt, Gary V. & Mayer, Christopher J., 1998. "Intergenerational Transfers, Borrowing Constraints, and Saving Behavior: Evidence from the Housing Market," Journal of Urban Economics, Elsevier, vol. 44(1), pages 135-157, July.
  7. Yannis M. Ioannides, 1999. "Residential Neighborhood Effects," Discussion Papers Series, Department of Economics, Tufts University 9912, Department of Economics, Tufts University.
  8. Bruce Sacerdote, 2000. "Peer Effects with Random Assignment: Results for Dartmouth Roommates," NBER Working Papers 7469, National Bureau of Economic Research, Inc.
  9. Richard K. Green & Michelle J. White, 1994. "Measuring the Benefits of Homeowning: Effects on Children," University of Chicago - George G. Stigler Center for Study of Economy and State 93, Chicago - Center for Study of Economy and State.
  10. Lawrence Katz & B. Jeffrey Liebman, 2000. "Moving to Opportunity in Boston: Early Results of a Randomized Mobility Experiment," Working Papers 820, Princeton University, Department of Economics, Industrial Relations Section..
  11. Chernozhukov, Victor & Hansen, Christian, 2008. "The reduced form: A simple approach to inference with weak instruments," Economics Letters, Elsevier, vol. 100(1), pages 68-71, July.
  12. Edward L. Glaeser & Jesse M. Shapiro, 2003. "The Benefits of the Home Mortgage Interest Deduction," NBER Chapters, in: Tax Policy and the Economy, Volume 17, pages 37-82 National Bureau of Economic Research, Inc.
  13. Jakob Roland Munch & Michael Rosholm & Michael Svarer, 2006. "Home Ownership, Job Duration, and Wages," Economics Working Papers 2006-06, School of Economics and Management, University of Aarhus.
  14. DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, Elsevier, vol. 45(2), pages 354-384, March.
  15. Justine S. Hastings & Thomas J. Kane & Douglas O. Staiger & Jeffrey M. Weinstein, 2005. "The Effect of Randomized School Admissions on Voter Participation," NBER Working Papers 11794, National Bureau of Economic Research, Inc.
  16. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2002. "An Economic Approach to Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 437-458, November.
  17. Joshua Angrist & Alan Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Working Papers 834, Princeton University, Department of Economics, Industrial Relations Section..
  18. Coulson, N. Edward & Fisher, Lynn M., 2009. "Housing tenure and labor market impacts: The search goes on," Journal of Urban Economics, Elsevier, vol. 65(3), pages 252-264, May.
  19. Mills, Gregory & Gale, William G. & Patterson, Rhiannon & Engelhardt, Gary V. & Eriksen, Michael D. & Apostolov, Emil, 2008. "Effects of individual development accounts on asset purchases and saving behavior: Evidence from a controlled experiment," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1509-1530, June.
  20. Engelhardt, Gary V, 1996. "Tax Subsidies and Household Saving: Evidence from Canada," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 1237-68, November.
  21. John Harding & Thomas J. Miceli & C.F. Sirmans, 2000. "Do Owners Take Better Care of Their Housing Than Renters?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 28(4), pages 663-681.
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Citations

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Cited by:
  1. Grimes, Arthur & Stillman, Steven & Young, Chris, 2011. "Homeownership, Social Capital and Parental Voice in Schooling," IZA Discussion Papers 6168, Institute for the Study of Labor (IZA).
  2. W. Scott Frame & Larry D. Wall & Lawrence J. White, 2012. "The Devil's in the Tail: Residential Mortgage Finance and the U.S. Treasury," Working Papers 12-12, New York University, Leonard N. Stern School of Business, Department of Economics.
  3. Jean-Marie Dufour & Joachim Wilde, 2013. "Weak Identification in Probit Models with Endogenous Covariates," Working Papers 95, Institute of Empirical Economic Research, revised 28 Feb 2013.
  4. Mika Kortelainen & Tuukka Saarimaa, 2012. "Do Homeowners Benefit Urban Neighborhoods? Evidence from Housing Prices," SERC Discussion Papers 0110, Spatial Economics Research Centre, LSE.
  5. Eriksen, Michael D., 2010. "Homeownership subsidies and the marriage decisions of low-income households," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 490-497, November.

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