Tenure Choice of American Youth

33 Pages Posted: 4 Jul 2004 Last revised: 20 Jul 2010

See all articles by Donald R. Haurin

Donald R. Haurin

Ohio State University (OSU) - Economics

Patric H. Hendershott

University of Aberdeen - Centre for Property Research; National Bureau of Economic Research (NBER)

Dongwook Kim

University of Rochester - Wallis Institute of Political Economy

Date Written: March 1990

Abstract

While there seems to be no end to estimates of housing tenure determinants, prior studies have not accounted for the simultaneity of tenure choice with household formation, labor supply or the marriage decision. Our estimates are superior to those in the literature both because we address these issues and because we better measure the cost of owning relative to renting. Accounting for simultaneity with the household formation and labor supply decisions matter. Using a household's predicted wage rate rather than its observed income doubles the response of tenure choice to the price of owning relative to renting. Including household formation selectivity correction variables cuts the response to tenure choice to the predicted wage by 25 percent. Moreover, the impact of variations in demographic variables on tenure choice is sharply reduced after correcting for selectivity bias.

Suggested Citation

Haurin, Donald R. and Hendershott, Patric H. and Kim, Dongwook, Tenure Choice of American Youth (March 1990). NBER Working Paper No. w3310. Available at SSRN: https://ssrn.com/abstract=314631

Donald R. Haurin (Contact Author)

Ohio State University (OSU) - Economics ( email )

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Patric H. Hendershott

University of Aberdeen - Centre for Property Research ( email )

Aberdeen AB24 2UF
Scotland

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Dongwook Kim

University of Rochester - Wallis Institute of Political Economy

Rochester, NY 14627
United States

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