The Effect of Home-Owning on Business Development: Micro-Level Evidence

Posted: 6 Jan 2018

See all articles by Bingbing Wang

Bingbing Wang

University of Southern California - Lusk Center for Real Estate

Date Written: December 30, 2017

Abstract

This paper evaluates the effect of home-owning on business. There are both positive and negative spillovers from home-owning. The positive spillover is that owners are more stable and they build better amenities, which attracts business. The negative one arises through the NIMBY effect. Both impacts vary with the distance between residence and business, neighborhood income levels, and business types. The aim of this paper is to firstly identify the distance at which the positive effect exceeds the negative one or vice versa. Secondly, I want to find whether the net impact differs for higher or lower residential income groups. Finally, I investigate the impacts for different industries. I employ a K-means clustering method to study the spatial effect with distance by clustering the business first and then drawing donut rings of residents around business clusters. The major endogeneity concern might be the reverse causation. I incorporate multiple identification strategies to cross check the results: fixed effects (FE), first difference (FD) and Instrumental Variable methods (IV). Using American Community Survey (ACS) and Longitudinal Employer-Household Dynamics (LEHD) Work Area Characteristics (WAC) panel data from 2009 to 2014, I conclude that home-owning only decreases the job counts of adjacent distances of within .3 miles and benefits the business in 3-5 miles. Negative impacts are only identified in higher income groups while the lower income groups benefit business development. Service industries like Retail, Art and Professional Services are welcomed in higher income groups while Manufacturing, Real Estate and Car Rental and Leasing are welcomed in lower income groups.

Keywords: home-ownership, business development, industrial organization, spatial relationship

JEL Classification: R23, R30, R11, C23

Suggested Citation

Wang, Bingbing, The Effect of Home-Owning on Business Development: Micro-Level Evidence (December 30, 2017). Available at SSRN: https://ssrn.com/abstract=3095732 or http://dx.doi.org/10.2139/ssrn.3095732

Bingbing Wang (Contact Author)

University of Southern California - Lusk Center for Real Estate ( email )

650 Childs Way
Los Angeles, CA 90089
United States

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