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Do Family Wealth Shocks Affect Fertility Choices? Evidence from the Housing Market Boom and Bust

Michael Lovenheim () and Kevin Mumford ()

No 09-004, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: Little is known about how wealth affects fertility decisions of the household. This paper fills this gap by investigating how changes in housing wealth affect fertility. We first conduct a state-level aggregate analysis to investigate how the birth rate is related to housing prices using differences in the timing and size of the housing market boom and bust across different states over time. We then conduct an analysis using restricted-use data from the Panel Study of Income Dynamics that allows us to track how women’s fertility behavior is related to individual-level housing price growth. We find that for homeowners, a $10,000 increase in real housing wealth causes a 0.07 percent increase in fertility. We find little effects of MSA-level housing price growth on the fertility of renters, which supports our identification strategy. That increases in housing wealth are strongly associated with increases in fertility is consistent with some recent work showing a positive income effect on births, and our estimates are suggestive that the large recent variation in the housing market could have sizeable demographic effects that are driven by the positive effect of housing wealth on fertility.

Keywords: fertility; wealth shocks; housing market; demographics (search for similar items in EconPapers)
JEL-codes: J13 (search for similar items in EconPapers)
Date: 2010-01
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