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Homeownership subsidies and the marriage decisions of low-income households

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  • Eriksen, Michael D.

Abstract

This paper estimates the impact of being randomly assigned down payment assistance with a home purchase on the marriage and divorce decisions of low-income households using unique data from a field experiment. 1103 participants in Tulsa, Oklahoma were randomly assigned in 1998 to either a treatment group eligible to receive a 2:1 match on saving for a down payment, or a control group that was not eligible. Using data collected on treated and controls 18 and 48 months after randomization, it is shown that the offer of the subsidy had important impacts on participants' marriage and divorce decisions. Treated participants who reported being unmarried prior to randomization were 42% more likely to be married 48 months after opening an account than similar control group members. The offer to receive the subsidy is also shown to substantially increase the divorce rates for originally married participants, with the most pronounced effect occurring among women with children or those who reported poor spousal relations prior to randomization. Although the exact mechanisms for how the subsidy affects such decisions are unclear, homeownership is shown to have an important role.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 40 (2010)
Issue (Month): 6 (November)
Pages: 490-497

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Handle: RePEc:eee:regeco:v:40:y:2010:i:6:p:490-497

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Keywords: Marriage Divorce Homeownership Individual development accounts;

References

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  1. Michael P. Murray, 2006. "Avoiding Invalid Instruments and Coping with Weak Instruments," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 111-132, Fall.
  2. Ermisch, John, 1999. "Prices, Parents, and Young People's Household Formation," Journal of Urban Economics, Elsevier, vol. 45(1), pages 47-71, January.
  3. John Chao & Norman Swanson, 2004. "Consistent Estimation with a Large Number of Weak Instruments," Departmental Working Papers 200421, Rutgers University, Department of Economics.
  4. Donald Haurin & Stuart Rosenthal, 2007. "The Influence of Household Formation on Homeownership Rates across Time and Race," Working Papers 07-01, Ohio State University, Department of Economics.
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  8. Williamson Hoyne, Hilary, 1997. "Does welfare play any role in female headship decisions?," Journal of Public Economics, Elsevier, vol. 65(2), pages 89-117, August.
  9. Haurin, Donald R & Hendershott, Patric H & Kim, Dongwook, 1993. "The Impact of Real Rents and Wages on Household Formation," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 284-93, May.
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  11. Kerwin Kofi Charles & Erik Hurst, 2002. "The Transition To Home Ownership And The Black-White Wealth Gap," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 281-297, May.
  12. Haurin Donald R. & Hendershott Patric H. & Kim Dongwook, 1994. "Housing Decisions of American Youth," Journal of Urban Economics, Elsevier, vol. 35(1), pages 28-45, January.
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  14. Engelhardt, Gary V. & Eriksen, Michael D. & Gale, William G. & Mills, Gregory B., 2010. "What are the social benefits of homeownership? Experimental evidence for low-income households," Journal of Urban Economics, Elsevier, vol. 67(3), pages 249-258, May.
  15. 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.
  16. Saul D. Hoffman & Greg J. Duncan, 1995. "The Effect of Incomes, Wages, and AFDC Benefits on Marital Disruption," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 19-41.
  17. Borsch-Supan, Axel, 1986. "Household formation, housing prices, and public policy impacts," Journal of Public Economics, Elsevier, vol. 30(2), pages 145-164, July.
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