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Social security and elderly homeownership


  • Engelhardt, Gary V.


Over the last twenty-five years, the homeownership rate of households 65 years and older has risen steadily, while the homeownership rate for 35-64 year old households has remained relatively unchanged. At the same time, the real value of Social Security benefits has risen substantially. Using data from the March 1978 to 2001 Current Population Surveys, this paper documents the evolution and assesses the causal role of the Social Security program in increasing elderly homeownership. To isolate the causal effect, the analysis develops an instrumental-variable approach that relies on the large variation in benefits for birth cohorts from 1900 to 1930 due to double indexation of the system and the so-called Social Security "notch." For all elderly, the estimated elasticity of homeownership to Social Security benefits ranges from 0.26 to 0.49. Across marital groups, the widowed have the greatest responsiveness to benefits. Increases in benefits also increase household formation among the elderly. Overall, the estimates indicate that between half and as much as all of the time-series rise in elderly homeownership over the last twenty-five years can be attributable to the rise in Social Security benefits and suggest that reductions in benefits would alter homeownership among the elderly significantly.

Suggested Citation

  • Engelhardt, Gary V., 2008. "Social security and elderly homeownership," Journal of Urban Economics, Elsevier, vol. 63(1), pages 280-305, January.
  • Handle: RePEc:eee:juecon:v:63:y:2008:i:1:p:280-305

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    References listed on IDEAS

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    6. Gary V. Engelhardt & Jonathan Gruber & Cynthia D. Perry, 2005. "Social Security and Elderly Living Arrangements: Evidence from the Social Security Notch," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
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    11. John R. Moran & Kosali Ilayperuma Simon, 2004. "Income and the Use of Prescription Drugs by the Elderly: Evidence from the Notch Cohorts," Center for Policy Research Working Papers 66, Center for Policy Research, Maxwell School, Syracuse University.
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    Cited by:

    1. Maria Chiuri & Tullio Jappelli, 2010. "Do the elderly reduce housing equity? An international comparison," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(2), pages 643-663, March.
    2. Tsai, Yuping, 2015. "Social security income and the utilization of home care: Evidence from the social security notch," Journal of Health Economics, Elsevier, vol. 43(C), pages 45-55.
    3. Joan Costa Font & Richard Frank & Katherine Swartz, 2017. "Access to Long-Term Care After a Wealth Shock: Evidence from the Housing Bubble and Burst," NBER Working Papers 23781, National Bureau of Economic Research, Inc.
    4. Greenhalgh-Stanley, Nadia, 2012. "Medicaid and the housing and asset decisions of the elderly: Evidence from estate recovery programs," Journal of Urban Economics, Elsevier, vol. 72(2), pages 210-224.
    5. John Cawley & John Moran & Kosali Simon, 2010. "The impact of income on the weight of elderly Americans," Health Economics, John Wiley & Sons, Ltd., vol. 19(8), pages 979-993, August.
    6. Engelhardt, Gary V. & Greenhalgh-Stanley, Nadia, 2010. "Home health care and the housing and living arrangements of the elderly," Journal of Urban Economics, Elsevier, vol. 67(2), pages 226-238, March.
    7. Vere, James P., 2011. "Social Security and elderly labor supply: Evidence from the Health and Retirement Study," Labour Economics, Elsevier, vol. 18(5), pages 676-686, October.


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