The Impact of Home Ownership on Child Outcomes

Abstract

We analyze the impact of home owning on the cognitive and behavioral outcomes of children. Our study controls for many social, demographic, and economic variables previously found to influence child outcomes. We also address the issue of possible sample selection bias caused by unobserved variables that influence both the parent's choice of whether to own or rent and parental investment in their children.

The study uses four waves of a national data set, permitting a panel data analysis of the relationship of owning a home to three child outcomes: math achievement, reading recognition and behavior problems. Using panel data allows us to control for household and child-specific, unobserved, influential factors. We also use a treatment effects model to address the problem of sample selection bias.

We find that owning a home compared with renting leads to a higher quality home environment, the improvement being 16 to 22 percent. Considering both the direct and indirect effects of home ownership on child outcomes, we find that for children living in owned homes math achievement is up to seven percent higher and reading achievement is up to six percent higher, ceteris paribus. We also find that the measure of a child's behavior problems is up to four percent lower if the child resides in an owned home. Existing literature suggests that these youths' greater cognitive abilities and fewer behavioral problems will result in higher educational attainment, greater future earnings, and a reduced tendency to engage in deviant behaviors.

JEL Classification: D13, J13, J24, R2