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Imputed Income from Owner-Occupied Housing and Income Inequality

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  • Donald L. Lerman

    (Economic Research Service, U.S. Department of Agriculture and Robert I. Lerman is at the Heller School, Brandeis University)

  • Robert I. Lerman

    (Economic Research Service, U.S. Department of Agriculture and Robert I. Lerman is at the Heller School, Brandeis University)

Abstract

Imputed income from owner-occupied housing is generally not included in analyses of the distribution of income. Yet the value of homeownership is undoubtedly an important element distinguishing the economic status of one family from another. In this paper, using a new method to decompose income inequality by income source, we analyze the impact of potential income derived from the net worth of housing on a representative national sample of US homeowners. Using 1980 Survey of Residential Finance data, we find that housing income adds less to inequality per dollar of income than does income from all other sources.

Suggested Citation

  • Donald L. Lerman & Robert I. Lerman, 1986. "Imputed Income from Owner-Occupied Housing and Income Inequality," Urban Studies, Urban Studies Journal Limited, vol. 23(4), pages 323-331, August.
    • Handle: RePEc:sae:urbstu:v:23:y:1986:i:4:p:323-331
    DOI: 10.1080/00420988620080371
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    References listed on IDEAS

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    1. Litzenberger, Robert H & Sosin, Howard B, 1978. "Taxation and the Incidence of Homeownership across Income Groups," Journal of Finance, American Finance Association, vol. 33(3), pages 947-961, June.
    2. Hendershott, Patric H. & Cheng Hu, Sheng, 1981. "Inflation and extraordinary returns on owner-occupied housing: Some implications for capital allocation and productivity growth," Journal of Macroeconomics, Elsevier, vol. 3(2), pages 177-203.
    3. Rosen, Harvey S., 1979. "Housing decisions and the U.S. income tax : An econometric analysis," Journal of Public Economics, Elsevier, vol. 11(1), pages 1-23, February.
    4. Mayo, Stephen K., 1981. "Theory and estimation in the economics of housing demand," Journal of Urban Economics, Elsevier, vol. 10(1), pages 95-116, July.
    5. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
    6. Sheldon Danziger, 1980. "Do Working Wives Increase Family Income Inequality?," Journal of Human Resources, University of Wisconsin Press, vol. 15(3), pages 444-451.
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    Cited by:

    1. Donald L. Lerman & James J. Mikesell, 1988. "Impacts of Adding Net Worth to the Poverty Definition," Eastern Economic Journal, Eastern Economic Association, vol. 14(4), pages 357-370, Oct-Dec.
    2. Susan J. Smith, 1990. "Income, Housing Wealth and Gender Inequality," Urban Studies, Urban Studies Journal Limited, vol. 27(1), pages 67-88, February.
    3. Onrubia, Jorge & Rodado, M. Carmen & Ayala, Luis, 2009. "How do services of owner-occupied housing affect income inequality and redistribution?," Journal of Housing Economics, Elsevier, vol. 18(3), pages 224-232, September.
    4. Alexeev, Sergey, 2020. "The role of imputed rents in intergenerational income mobility in three countries," Journal of Housing Economics, Elsevier, vol. 49(C).
    5. Braga, Breno & Lerman, Robert I., 2019. "Accounting for homeownership in estimating real income growth," Economics Letters, Elsevier, vol. 174(C), pages 9-12.
    6. Frick, Joachim R. & Grabka, Markus M. & Smeeding, Timothy M. & Tsakloglou, Panos, 2010. "Distributional Effects of Imputed Rents in Five European Countries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 19(3), pages 167-179.

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