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Housing tenure choice and the dual income household

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  • Carter, Steven

Abstract

Housing tenure choice has been the subject of a very large literature. Many treatments have sought to estimate the effect of household income on the likelihood of home ownership. To date, no study has ever disaggregated the household income of married couples into the separate labor income components to see if one partner's income has a different effect than the other. Using a derived likelihood function to control for censoring in the wife's income, this paper estimates the effect of separate incomes on housing tenure choice, accounting for possible endogeneity of the wife's income. To compare the results of this estimation method, the paper also estimates the standard IV models, 2SLS and IV probit. While the results show that there is no endogeneity of the wife's income, ignoring the censoring of the endogenous variable (when a large fraction of observations are censored) can possibly lead to biased coefficient estimates. Also, this paper confirms the importance of total household income, which has a larger effect than the total disaggregated components.

Suggested Citation

  • Carter, Steven, 2011. "Housing tenure choice and the dual income household," Journal of Housing Economics, Elsevier, vol. 20(3), pages 159-170, September.
  • Handle: RePEc:eee:jhouse:v:20:y:2011:i:3:p:159-170
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    1. repec:taf:apeclt:v:23:y:2016:i:13:p:921-925 is not listed on IDEAS
    2. repec:ire:issued:v:21:n:02:2017:p:275-294 is not listed on IDEAS
    3. Bhat, Chandra R., 2015. "A comprehensive dwelling unit choice model accommodating psychological constructs within a search strategy for consideration set formation," Transportation Research Part B: Methodological, Elsevier, vol. 79(C), pages 161-188.
    4. Boehm, Thomas P. & Schlottmann, Alan M., 2014. "The dynamics of housing tenure choice: Lessons from Germany and the United States," Journal of Housing Economics, Elsevier, vol. 25(C), pages 1-19.
    5. Hoehn, John P. & Adanu, Kwami, 2014. "What motivates voters’ support for eminent domain reform: Ownership, vulnerability, or ideology?," International Review of Law and Economics, Elsevier, vol. 37(C), pages 90-99.

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