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Housing Mobility and Downsizing at Older Ages in Britain and the United States

Author

Listed:
  • Banks, James

    () (Institute for Fiscal Studies, London)

  • Blundell, Richard

    () (University College London)

  • Oldfield, Zoë

    () (Institute for Fiscal Studies, London)

  • Smith, James P.

    () (RAND)

Abstract

This paper investigates the effects of housing price risk on housing choices over the life-cycle. Housing price risk can be substantial but, unlike other risky assets which people can avoid, the fact that most people will eventually own their home creates an insurance demand for housing assets early in life. Our contribution is to focus on the importance of home ownership and housing wealth as a hedge against future house price risk for individuals moving up the ladder – people living in places with higher housing price risk should own their first home at a younger age, should live in larger homes, and should be less likely to refinance. These predictions are tested and shown to hold using panel data from the United States and Great Britain.

Suggested Citation

  • Banks, James & Blundell, Richard & Oldfield, Zoë & Smith, James P., 2010. "Housing Mobility and Downsizing at Older Ages in Britain and the United States," IZA Discussion Papers 5168, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5168
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    References listed on IDEAS

    as
    1. David A. Wise, 1989. "The Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise89-1, July.
    2. John Fitzgerald & Peter Gottschalk & Robert Moffitt, 1998. "An Analysis of Sample Attrition in Panel Data: The Michigan Panel Study of Income Dynamics," Journal of Human Resources, University of Wisconsin Press, vol. 33(2), pages 251-299.
    3. David A. Wise, 1990. "Issues in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise90-1, July.
    4. Louise Sheiner & David N. Weil, 1992. "The Housing Wealth of the Aged," NBER Working Papers 4115, National Bureau of Economic Research, Inc.
    5. Diamond, P., 1980. "Income taxation with fixed hours of work," Journal of Public Economics, Elsevier, vol. 13(1), pages 101-110, February.
    6. Disney, Richard & Henley, Andrew & Stears, Gary, 2002. "Housing costs, house price shocks and savings behaviour among older households in Britain," Regional Science and Urban Economics, Elsevier, vol. 32(5), pages 607-625, September.
    7. Devereux, Michael P. & Griffith, Rachel, 1998. "Taxes and the location of production: evidence from a panel of US multinationals," Journal of Public Economics, Elsevier, vol. 68(3), pages 335-367, June.
    8. Becketti, Sean, et al, 1988. "The Panel Study of Income Dynamics after Fourteen Years: An Evaluatio n," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 472-492, October.
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    Cited by:

    1. Alessandro Bucciol & Raffaele Miniaci, 2011. "Household Portfolios and Risk Bearing over Age and Time," Working Papers 15/2011, University of Verona, Department of Economics.
    2. James Banks & Elaine Kelly & James P. Smith, 2013. "Spousal Health Effects: The Role of Selection," NBER Chapters,in: Discoveries in the Economics of Aging, pages 255-279 National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    downsizing; migration;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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