Did the Modern Mortgage Set the Stage for the U.S. Baby Boom?

Lisa Dettling and Melissa Schettini Kearney

No 33446, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper proposes that the adoption of the modern U.S. mortgage (i.e., low down payment, long-term, and fixed-rate)—led by the Federal Housing Administration (FHA) and Veteran’s Administration (VA) loan insurance programs—set the stage for the mid-twentieth century U.S. baby boom by dramatically raising rates of home ownership for young families. Using newly digitized data on FHA- and VA- backed loan issuance and births by state-year, and a novel instrumental variables strategy that isolates supply-side variation in loan issuance, we find that the FHA and VA mortgage insurance programs led to 3 million additional births from 1935-1957, roughly 10 percent of the excess births in the baby boom. Aggregate effects mask differences by group—we find no effects of FHA/VA lending on births for Nonwhite women, consistent with well-documented racial discrimination in these lending programs. Our results highlight the importance of access to home ownership for fertility decisions.

JEL-codes: G21 H31 J13 N32 R38 (search for similar items in EconPapers)
Date: 2025-02
New Economics Papers: this item is included in nep-dem and nep-his
Note: CH DAE LS ME PE
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