Housing and the Life Cycle
Saturday, Jan. 4, 2020 2:30 PM - 4:30 PM (PDT)
- Chair: Mike Eriksen, University of Cincinnati
When Education Policy and Housing Policy Interact: Can We Correct for the Externalities?
AbstractA simple spatial equilibrium model with the peer group effect and local public finance can match several stylized facts of the labor market and housing market in the United States. Our counter-factual policy analyses generate further insights. First, the welfare of households can change as the government varies the location of public housing units with a neighborhood. Second, even though the public housing policy and housing voucher program deliver similar results at the household level, they are different as the former tends to benefit the offspring more, while the latter is the reverse. Third, combining school finance consolidation policy with public housing policy can lead to a Pareto improvement. Unfortunately, a policy that can benefit all agents, in the long run, may not be implemented as it can hurt some agents in the short run.
Bequest Motives, Inheritance Tax, and Housing Choice: A Problem of Inefficient Empty Nests
AbstractThe housing stock is underutilized in empty nests, which can be caused by the low mobility of elderly households and early renovations for their heirs. This study sheds light on the cause of inefficient empty nests by focusing on a bequest motive and inheritance tax. Japanese household panel data show that empty nests are more pronounced for elderly, non-moving, and renovating households. The motive to bequeath housing makes moving less likely but capacity-increasing renovations more likely. The motive to bequeath housing is influenced by the inheritance-tax benefit of housing in addition to income, wealth, and better housing structures. Thus, the inheritance-tax benefit of housing exacerbates a long-term empty nest problem by distorting housing choices.
Housing Wealth, Bequests, and the Elderly
AbstractThere has been little consensus on why individuals do not spend down their wealth by death. Competing theories debate whether assets are bequeathed intentionally or are unplanned. Combining data on expectations of future bequests in the Health and Retirement Study with changes in housing wealth during the housing boom, we aim to estimate whether an exogenous wealth shock changes expected bequests. We find exogenous wealth shocks lead to an increase in planned bequests. However, we do not find complete pass through of the wealth increase, and find larger responses for individuals with lower baseline wealth, health and risk aversion.
- R2 - Household Analysis
- D1 - Household Behavior and Family Economics