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House price growth when children are teenagers: a path to higher earnings?

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Abstract

The United States has a long history of promoting homeownership through the mortgage interest tax deduction, and home equity constitutes an important source of borrowing collateral. There is a sizable body of work studying how fluctuating house prices impact consumer behavior. Since college tuition costs pose a large financial burden for many U.S. families, access to housing equity may impact decisions about pursuing a post-secondary education. This paper adds to the literature by using MSA-level house-price variation and data from the Panel Study of Income Dynamics to study the link between future adult earnings and the house price growth that occurs around the time children are 17 years-old, when most college enrollment decisions are made, and how this link varies based on whether parents own or rent their homes. The sample period runs from 1979 through 1999.

Suggested Citation

  • Daniel H. Cooper & María Jose Luengo-Prado, 2014. "House price growth when children are teenagers: a path to higher earnings?," Working Papers 14-13, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:14-13
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    1. is not listed on IDEAS
    2. Cooper, Kerris & Stewart, Kitty, 2017. "Does Money Affect Children’s Outcomes? An update," LSE Research Online Documents on Economics 103494, London School of Economics and Political Science, LSE Library.
    3. Fu, Shihe & Liao, Yu & Zhang, Junfu, 2016. "The effect of housing wealth on labor force participation: Evidence from China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 59-69.
    4. Lucy McMillan & Pinghui Wu, 2023. "Job Loss, Credit Card Loans, and the College-persistence Decision of US Working Students," Working Papers 23-19, Federal Reserve Bank of Boston.
    5. Jing You & Xinxin Ding & Miguel Niño-Zarazúa & Sangui Wang, 2015. "Lofty pine and clinging vine: The educational 'Great Gatsby Curve' and the role of house prices," WIDER Working Paper Series wp-2015-147, World Institute for Development Economic Research (UNU-WIDER).
    6. Andra C. Ghent & Marianna Kudlyak, 2015. "Intergenerational Linkages in Household Credit," Working Paper 15-14, Federal Reserve Bank of Richmond.
    7. Jeremy Kirk, 2024. "The Impact of Parental Resources on Human Capital Investment and Labor Market Outcomes: Evidence from the Great Recession," Working Papers 24-34, Center for Economic Studies, U.S. Census Bureau.
    8. Phillip B. Levine & Dubravka Ritter, 2024. "The racial wealth gap, financial aid, and college access," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 43(2), pages 555-581, March.
    9. You, Jing & Ding, Xinxin & Niño-Zarazúa, Miguel & Wang, Sangui, 2021. "The intergenerational impact of house prices on education: evidence from China," Journal of Housing Economics, Elsevier, vol. 54(C).
    10. Kerris Cooper & Kitty Stewart, 2017. "Does Money Affect Children's Outcomes? An update," CASE Papers /203, Centre for Analysis of Social Exclusion, LSE.
    11. William N Goetzmann & Christophe Spaenjers & Stijn Van Nieuwerburgh, 2021. "Real and Private-Value Assets [Gendered prices]," The Review of Financial Studies, Society for Financial Studies, vol. 34(8), pages 3497-3526.
    12. Li, Han & Li, Jiangyi & Lu, Yi & Xie, Huihua, 2020. "Housing wealth and labor supply: Evidence from a regression discontinuity design," Journal of Public Economics, Elsevier, vol. 183(C).
    13. V. Joseph Hotz & Emily E. Wiemers & Joshua Rasmussen & Kate Maxwell Koegel, 2023. "The Role of Parental Wealth and Income in Financing Children’s College Attendance and Its Consequences," Journal of Human Resources, University of Wisconsin Press, vol. 58(6), pages 1850-1880.
    14. Jing You & Xinxin Ding & Miguel Niño-Zarazúa & Sangui Wang, 2015. "Lofty pine and clinging vine: The educational ‘Great Gatsby Curve’ and the role of house prices," WIDER Working Paper Series 147, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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