The asymmetric housing wealth effect on childbirth

Shinichiro Iwata () and Michio Naoi
Additional contact information
Shinichiro Iwata: University of Toyama

Review of Economics of the Household, 2017, vol. 15, issue 4, No 15, 1373-1397

Abstract: Abstract The literature has shown that an increase in housing wealth, driven by unexpected shocks to house prices, exerts a positive effect on the birthrates of homeowners. According to canonical models, a decrease in housing wealth has a symmetric negative impact on the fertility behavior of households. That is, housing gains and losses of the same size have identical quantitative effects on fertility. In comparison, the reference-dependent preferences in prospect theory suggest that people care more about housing losses than equivalent gains, leading to an asymmetric effect of housing wealth on the fertility decision. We propose a theoretical model where household utility depends on both childbirth and housing wealth. In this model, the utility from housing wealth is reference dependent in the sense that we assume the housing value in the previous year is the reference. The theoretical model suggests that a decrease in housing wealth would have a larger impact on the probability of childbirth than an equivalent increase. We test this theoretical prediction using longitudinal data on Japanese households. Consistent with the theoretical prediction, our empirical results show that the fertility responses of homeowners are substantially larger for housing losses than equivalent gains.

Keywords: Childbirth; Housing prices; Wealth; Homeownership; Reference-dependent preferences; Loss aversion (search for similar items in EconPapers)
JEL-codes: D11 D12 J13 R21 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11150-016-9355-8 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The asymmetric housing wealth effect on childbirth (2015)
Working Paper: The Asymmetric Housing Wealth Effect on Childbirth (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:reveho:v:15:y:2017:i:4:d:10.1007_s11150-016-9355-8

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11150/PS2

DOI: 10.1007/s11150-016-9355-8

Access Statistics for this article

Review of Economics of the Household is currently edited by Shoshana Grossbard

More articles in Review of Economics of the Household from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().