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Accounting for the Decline in Homeownership among the Young

Yuxi Yao ()
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Yuxi Yao: University of Western Ontario

No GRU_2021_010, GRU Working Paper Series from City University of Hong Kong, Department of Economics and Finance, Global Research Unit

Abstract: This paper documents that the drop in young homeownership is more persistent among non-college graduates compared to college graduates: while some college graduates postpone home purchasing, non-college graduates are more likely to remain longterm renters. I develop a model showing that the combination of a higher share of college graduates and a widening education-driven income gap accounts for the delayed home purchasing of college graduates and the lack of purchasing among non-college graduates. Exploiting cross-city variation, I find that the mechanism can quantitatively account for the diverging ownership decisions between the two education groups from 1980 to 2019.

Keywords: Housing Tenure Choice; College Share; Household Income; Housing Prices; General Equilibrium Effects (search for similar items in EconPapers)
JEL-codes: E21 E60 R21 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2021-04-29
New Economics Papers: this item is included in nep-dge, nep-mac and nep-ure
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