On the Negative Relationship between Labor Income Uncertainty and Homeownership: Risk Aversion vs. Credit Constraints

Luis Diaz-Serrano ()

Economics Department Working Paper Series from Department of Economics, National University of Ireland - Maynooth

Abstract: In this paper we test for the first time whether the driving force behind the negative effect of income uncertainty on owner-occupancy propensities is risk aversion or credit constraints. To disentangle this puzzle we estimate reduced form equations using Italian data. Consistent with the previous empirical evidence in the US, our results confirm that in Italy both labor income uncertainty and credit constraints exert a significant negative effect on the probability of homeownership. However, our main findings indicate that the negative relationship between labor income uncertainty and homeownership is driven by households’ risk aversion.

Keywords: Homeownership; income uncertainty; credit constraints (search for similar items in EconPapers)
JEL-codes: D1 J0 R0 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2005-01
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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Related works:
Journal Article: On the negative relationship between labor income uncertainty and homeownership: Risk-aversion vs. credit constraints (2005)
Working Paper: On the Negative Relationship between Labor Income Uncertainty and Homeownership: Risk Aversion vs. Credit Constraints (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:may:mayecw:n1460105

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