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Accounting for the decline in homeownership among the young

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  • Yuxi Yao

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 likely to remain long‐term renters. I develop a model showing that the combination of rising college share and a widening education‐driven income gap accounts for the delayed purchasing of college graduates and the lack of purchasing among non‐college graduates. Exploiting cross‐city variation, I verify the implications of the model and show that the mechanism can quantitatively account for the diverging ownership decisions between the two education groups from 1980 to 2019.

Suggested Citation

  • Yuxi Yao, 2023. "Accounting for the decline in homeownership among the young," Contemporary Economic Policy, Western Economic Association International, vol. 41(1), pages 79-102, January.
    • Handle: RePEc:bla:coecpo:v:41:y:2023:i:1:p:79-102
    DOI: 10.1111/coep.12587
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    3. Leung, Charles Ka Yui, 2022. "Housing and Macroeconomics," MPRA Paper 115500, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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