Marry for Love, or Love of House?

Sumit Agarwal, Yi Fan (), Wenlan Qian and Tien Foo Sing

ERES from European Real Estate Society (ERES)

Abstract: This paper investigates how a public housing policy with pro-marriage design impacts the rise and fall of marriage and explores a consumption channel interacted with parents’ housing status. In 2001, Singapore launched a Build-to-Order (BTO) scheme to build and allocate new public housing, with a pre-requisite of forming family nucleus. Using administrative data and government records from 1996 to 2019, we first show stylized facts on the rising number of marriage and divorce, which coincide with the launching and expanding of the BTO scheme. Couples living in the BTO flats are significantly younger and more likely to have short marriages compared to those under non-BTO schemes. Using supervised machine learning, we find that BTO and private consumption have the strongest impacts on marriage decisions. To explore possible channels, using high-quality consumption data between 2010 and 2012 and a propensity score matching method, we find that married BTO residents under 35 years old consume 7% less monthly—especially on necessity goods—compared to singles in non-BTO public housing. Evidence on mortgage reveals a possible trade-off between personal expenditure and housing mortgage. The consumption drop is more severe for married BTO residents born to parents in public housing. However, no evidence is shown among singles above 35 living in BTO flats, who are no longer bound by the purchase pre-requisite of forming family nucleus. It is likely that the BTO scheme spurs early marriage; though the consumption friction due to budget constraint induces dissolution of marriage in short span, especially for those born in humble families. Our paper sheds light on the spill-over effects of public policy between housing and marriage market.

Keywords: Consumption; intergenerational impact; marriage friction; Public Housing (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2021-01-01
New Economics Papers: this item is included in nep-isf, nep-sea and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2021_222

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