IDEAS home Printed from
   My bibliography  Save this paper

Inequality, Frictional Assignment and Home-ownership


  • Huw Lloyd-Ellis

    (Queen's University)

  • Derek Stacey

    (Ryerson University)

  • Allen Head

    (Queen's University)


Cross-city variation in the rate of home-ownership and the relative costs of renting and owning are studied using a model of frictional assignment. Houses of different types are built by a competitive construction industry and either rented in Walrasian markets or sold through a process of competitive search to households. Households differ with regard to their permanent income and sort over house types and housing tenure at each point in time. Along a balanced growth path, both the composition of the city's housing stock and the rate of home-ownership depend on the distributions of income, construction costs, and housing amenities. In the absence of either financial frictions or minimum house size requirements, higher income households live in better houses and are more likely on average to be homeowners than lower income ones. A calibrated version illustrates the extent to which income/wealth inequality alone can ac- count for variation in home-ownership and the price-rent ratio both within and across cities.

Suggested Citation

  • Huw Lloyd-Ellis & Derek Stacey & Allen Head, 2017. "Inequality, Frictional Assignment and Home-ownership," 2017 Meeting Papers 1336, Society for Economic Dynamics.
  • Handle: RePEc:red:sed017:1336

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Randall Wright & Philipp Kircher & Benoit Julîen & Veronica Guerrieri, 2017. "Directed Search: A Guided Tour," NBER Working Papers 23884, National Bureau of Economic Research, Inc.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed017:1336. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Zimmermann (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.