Tenure choice, portfolio structure and long-term care – Optimal risk management in retirement

Hans Fehr and Maurice Hofmann

The Journal of the Economics of Ageing, 2020, vol. 17, issue C

Abstract: We study the interplay between tenure decisions, stock market investment and the public social security system. Housing equity not only serves a dual purpose as a consumption good and as an asset, but also provides insurance to buffer long-term care risks in retirement. Our life cycle model captures these links in order to explain why homeownership in Germany is so low. Our simulation results indicate that the public long-term care system reduces the homeownership rate in Germany by up to 25 percentage points. We show that this channel may help explaining the gap in homeownership between Germany and Mediterranean countries.

Keywords: Homeownership; Stock market participation; Life-cycle models; Long-term care (search for similar items in EconPapers)
JEL-codes: C61 D15 G11 H55 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Tenure Choice, Portfolio Structure and Long-Term Care - Optimal Risk Management in Retirement (2019)
Working Paper: Tenure Choice, Portfolio Structure and Long-term Care - Optimal Risk Management in Retirement (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joecag:v:17:y:2020:i:c:s2212828x20300050

DOI: 10.1016/j.jeoa.2020.100240

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