Measuring the Benefits of Homeowning: Effects on Children

doi:10.1006/juec.1996.2010

Journal of Urban Economics

Volume 41, Issue 3, May 1997, Pages 441-461

https://doi.org/10.1006/juec.1996.2010 Get rights and content

Abstract

In this paper we examine whether homeowning benefits children by testing whether children of homeowners stay in school longer than children of renters and whether daughters of homeowners are less likely to have children as teenagers than daughters of renters. We use both probit models and a bivariate probit technique which takes account of possible selection bias due to differences between parents who choose to own versus rent. We find in several data sets that both effects are statistically significant and quantitatively important—particularly for low-income households. We also estimate that the dollar benefit per low- income household of parents being homeowners rather than renters is at least $31,000.

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Citation Excerpt :
Using the Panel Study of Income Dynamics (PSID), Green and White (1997) find that parental homeownership is associated with a lower high school dropout rate and lower teen birth rate (age 17 or younger) after controlling for a rich set of child and family characteristics. Further, they find no evidence of selection using a bivariate probit model, although Barker and Miller (2009) later argue that the instrument used for this test—the value of housing CPI in the year the family last moved divided by the national average 30-year mortgage rate in that year--may not capture the full economic costs of moving and that therefore the results in Green and White (1997) might still suffer from selection bias. Also using the PSID, but accounting for selection by instrumenting for homeownership using annual state average homeownership rates by race and income quintile, Aaronson (2000) finds positive effects of parental homeownership on graduation outcomes, although these effects entirely driven by greater residential stability among homeowners.
The view of owning a home as integral to the “American dream” is enshrined in numerous policies designed to promote homeownership. Whether or not these policies are worth their cost is unclear and depends, in part, on the extent to which owner-occupied housing (OOH) confers socially important benefits. Yet identifying the effects of OOH is complicated, not only due to standard concerns about selection, but also because OOH tends to be located in neighborhoods with better amenities (including schools) and is often synonymous with living in a single-family home. In this paper we use rich, longitudinal student-level data to examine whether students in OOH have better academic and health outcomes than those in renter occupied housing (ROH). We address concerns about selection using student fixed effects and a rich set of individual, building, and neighborhood controls. We find that there is notable variation in both the characteristics and size of OOH and the types of students who live in OOH in NYC. While raw differences show that students who live in OOH have better outcomes—they are less likely to be chronically absent, obese, or overweight and have higher standardized test scores—much of this disparity is explained by differences in the students who select into OOH. In models where we account for selection into OOH and building type with rich controls and student fixed effects, we find small positive effects of moving into OOH on attendance and math scores with no consistent evidence of any impacts of OOH on BMI or obesity, suggesting that policies that promote homeownership might be oversold.
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Regular ArticleMeasuring the Benefits of Homeowning: Effects on Children☆

Abstract

Journal of Urban Economics

Regional Science and Urban Economics

Teen out-of-wedlock births and welfare receipt: The role of the childhood events and economic circumstances

Review of Economics and Statistics

Welfare benefits, economic opportunities and the incidence of out-of-wedlock births among black teenage girls

Demography

The preferential income tax treatment of owner-occupied housing: Who really benefits?

Journal of Housing Research

Notes on the tax treatment of structures

The Effects of Taxation on Capital Accumulation

The Changing Influences of Demographics, Family Structure, Income and Affordability on Homeownership

Regular Article
Measuring the Benefits of Homeowning: Effects on Children☆