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Back to school when times are bad? The role of housing wealth

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  • Popov, Alexander
  • Pestova, Anna

Abstract

College enrolment typically rises during recessions. This paper demonstrates that housing wealth destruction dampened this countercyclical effect in areas most affected by the U.S. housing bust of 2008-2011. By combining household data with a mortgage credit register and housing price data, we reveal that negative shocks to housing wealth significantly reduced college enrolment among homeowners relative to renters during this period. Up to 2% of the local college-age population did not pursue college enrolment at the height of the bust due to housing wealth destruction. The negative impact of homeownership on college education persists for a decade, contributing to persistently lower incomes among homeowners in the most affected areas. JEL Classification: I24, E32, J24

Suggested Citation

  • Popov, Alexander & Pestova, Anna, 2025. "Back to school when times are bad? The role of housing wealth," Working Paper Series 3083, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20253083
    Note: 861282
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    Keywords

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    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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