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Explaining the black-white homeownership gap: the role of own wealth, parental externalities and locational preferences

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  • Hilber, Christian A. L.
  • Liu, Yingchun

Abstract

African Americans in the United States are considerably less likely to own their homes compared to Whites. Differences in household income and other socio-economic and demographic characteristics can only partially explain this gap and previous studies suggest that the ‘unexplained’ gap has increased over time. In this paper we use the Panel Study of Income Dynamics (PSID) intergenerational data, which provides information on household wealth, parental characteristics and macro-location choice. We find that African-American households are 6.5 percent less likely to own if only traditional explanatory variables are controlled for. However, the black-white homeownership gap disappears if differences in own and parental wealth and in the preferred macro-location type are accounted for.

Suggested Citation

  • Hilber, Christian A. L. & Liu, Yingchun, 2007. "Explaining the black-white homeownership gap: the role of own wealth, parental externalities and locational preferences," LSE Research Online Documents on Economics 4380, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:4380
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    Cited by:

    1. Coulson, N. Edward & Dalton, Maurice, 2010. "Temporal and ethnic decompositions of homeownership rates: Synthetic cohorts across five censuses," Journal of Housing Economics, Elsevier, vol. 19(3), pages 155-166, September.
    2. Gobillon, Laurent & Solignac, Matthieu, 2015. "Homeownership of immigrants in France: selection effects related to international migration flows," CEPR Discussion Papers 10975, C.E.P.R. Discussion Papers.
    3. Tracy M. Turner & Marc T. Smith, 2009. "Exits From Homeownership: The Effects Of Race, Ethnicity, And Income," Journal of Regional Science, Wiley Blackwell, vol. 49(1), pages 1-32.
    4. Bischoff, Oliver, 2012. "Explaining regional variation in equilibrium real estate prices and income," Journal of Housing Economics, Elsevier, vol. 21(1), pages 1-15.
    5. Laurent Gobillon & Matthieu Solignac, 2014. "Homeownership of immigrants in France," ERSA conference papers ersa14p558, European Regional Science Association.
    6. Zorlu, Aslan & Mulder, Clara H. & van Gaalen, Ruben, 2014. "Ethnic disparities in the transition to home ownership," Journal of Housing Economics, Elsevier, vol. 26(C), pages 151-163.
    7. Laurent Gobillon & Matthieu Solignac, 2015. "Homeownership of immigrants in France: selection effects related to international migration flows," Working Papers halshs-01233069, HAL.
    8. Chakrabarty, Durba & Osei, Michael J. & Winters, John V. & Zhao, Danyang, 2017. "Are Immigrant and Minority Homeownership Rates Gaining Ground in the US?," IZA Discussion Papers 10852, Institute for the Study of Labor (IZA).
    9. Josep Maria Raya & Aleksander Kucel, 2016. "Did Housing Taxation Contribute to Increase Riskier Borrowing?," The Journal of Real Estate Finance and Economics, Springer, vol. 53(1), pages 90-113, July.
    10. Sejeong Ha & Christian A. L. Hilber, 2013. "Do Long Distance Moves Discourage Homeownership? Evidence from England," SERC Discussion Papers 0141, Spatial Economics Research Centre, LSE.
    11. Chan, Sewin & Haughwout, Andrew & Tracy, Joseph, 2015. "How Mortgage Finance Affects the Urban Landscape," Handbook of Regional and Urban Economics, Elsevier.
    12. repec:kap:poprpr:v:36:y:2017:i:4:d:10.1007_s11113-017-9429-1 is not listed on IDEAS
    13. repec:eee:regeco:v:70:y:2018:i:c:p:80-96 is not listed on IDEAS
    14. Mundra, Kusum & Uwaifo Oyelere, Ruth, 2013. "Determinants of Immigrant Homeownership: Examining their Changing Role during the Great Recession and Beyond," IZA Discussion Papers 7468, Institute for the Study of Labor (IZA).
    15. Turner, Tracy M. & Luea, Heather, 2009. "Homeownership, wealth accumulation and income status," Journal of Housing Economics, Elsevier, vol. 18(2), pages 104-114, June.

    More about this item

    Keywords

    homeownership; housing tenure choice; location choice; wealth effects; intergenerational effects.;

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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