IDEAS home Printed from https://ideas.repec.org/a/eee/jhouse/v49y2020ics1051137720300462.html
   My bibliography  Save this article

The role of imputed rents in intergenerational income mobility in three countries

Author

Listed:
  • Alexeev, Sergey

Abstract

This is the first paper that studies the effects of including non-monetary income from housing (imputed rent) in the measure of income on intergenerational income mobility. Using national panel data sets for Australia, the United States and Germany, it is shown that only Australian society becomes 22% less mobile as measured by an intergenerational rank correlation. This decrease is also confirmed using the intergenerational transition matrices. As a result, cross-regional comparisons of intergenerational income mobility may be misleading, especially using tax data as imputed rent is rarely taxed.

Suggested Citation

  • Alexeev, Sergey, 2020. "The role of imputed rents in intergenerational income mobility in three countries," Journal of Housing Economics, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:jhouse:v:49:y:2020:i:c:s1051137720300462
    DOI: 10.1016/j.jhe.2020.101710
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1051137720300462
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jhe.2020.101710?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jantti, Markus & Bratsberg, Bernt & Roed, Knut & Raaum, Oddbjorn & Naylor, Robin & Osterbacka, Eva & Bjorklund, Anders & Eriksson, Tor, 2005. "American exceptionalism in a new light: a comparison of intergenerational earnings mobility in the Nordic countries, the United Kingdom and the United States," Economic Research Papers 269752, University of Warwick - Department of Economics.
    2. Leonardo Gasparini & Walter Sosa Escudero, 2003. "Implicit Rents from Own-housing and Income Distribution: Econometric Estimates for Greater Buenos Aires," Journal of Income Distribution, Ad libros publications inc., vol. 12(1-2), pages 3-3, June.
    3. Garner, Thesia I. & Short, Kathleen, 2009. "Accounting for owner-occupied dwelling services: Aggregates and distributions," Journal of Housing Economics, Elsevier, vol. 18(3), pages 233-248, September.
    4. Pirmin Fessler & Miriam Rehm & Lukas Tockner, 2016. "The impact of housing non-cash income on the household income distribution in Austria," Urban Studies, Urban Studies Journal Limited, vol. 53(13), pages 2849-2866, October.
    5. repec:bla:revinw:v:39:y:1993:i:3:p:229-56 is not listed on IDEAS
    6. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition, pages 257-298, National Bureau of Economic Research, Inc.
    7. Donald L. Lerman & Robert I. Lerman, 1986. "Imputed Income from Owner-Occupied Housing and Income Inequality," Urban Studies, Urban Studies Journal Limited, vol. 23(4), pages 323-331, August.
    8. Miles Corak, 2013. "Income Inequality, Equality of Opportunity, and Intergenerational Mobility," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 79-102, Summer.
    9. Bernt Bratsberg & Knut Røed & Oddbjørn Raaum & Robin Naylor & Markus Ja¨ntti & Tor Eriksson & Eva O¨sterbacka, 2007. "Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons," Economic Journal, Royal Economic Society, vol. 117(519), pages 72-92, March.
    10. Miles Corak & Andrew Heisz, 1999. "The Intergenerational Earnings and Income Mobility of Canadian Men: Evidence from Longitudinal Income Tax Data," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 504-533.
    11. Chelsea Murray & Robert Graham Clark & Silvia Mendolia & Peter Siminski, 2018. "Direct Measures of Intergenerational Income Mobility for Australia," The Economic Record, The Economic Society of Australia, vol. 94(307), pages 445-468, December.
    12. Carlos Felipe Balcázar & Lidia Ceriani & Sergio Olivieri & Marco Ranzani, 2017. "Rent‐Imputation for Welfare Measurement: A Review of Methodologies and Empirical Findings," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 881-898, December.
    13. Buckley, Robert M & Gurenko, Eugene N, 1997. "Housing and Income Distribution in Russia: Zhivago's Legacy," The World Bank Research Observer, World Bank, vol. 12(1), pages 19-32, February.
    14. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1553-1623.
    15. Torrey, Barbara Boyle & Smeeding, Timothy M & Bailey, Debra, 1999. "Income Transitions in Central European Households," Economic Development and Cultural Change, University of Chicago Press, vol. 47(2), pages 237-257, January.
    16. Grawe, Nathan D., 2006. "Lifecycle bias in estimates of intergenerational earnings persistence," Labour Economics, Elsevier, vol. 13(5), pages 551-570, October.
    17. Robert J. Hill, 2013. "Hedonic Price Indexes For Residential Housing: A Survey, Evaluation And Taxonomy," Journal of Economic Surveys, Wiley Blackwell, vol. 27(5), pages 879-914, December.
    18. Pekkarinen, Tuomas & Uusitalo, Roope & Kerr, Sari, 2009. "School tracking and intergenerational income mobility: Evidence from the Finnish comprehensive school reform," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 965-973, August.
    19. Thesia I. Garner & Randal Verbrugge, 2007. "Puzzling Divergence of U.S. Rents and User Costs, 1980-2004: Summary and Extensions," Working Papers 409, U.S. Bureau of Labor Statistics.
    20. Frick, Joachim R. & Grabka, Markus M. & Smeeding, Timothy M. & Tsakloglou, Panos, 2010. "Distributional Effects of Imputed Rents in Five European Countries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 19(3), pages 167-179.
    21. Heston, Alan & Nakamura, Alice O., 2009. "Questions about the equivalence of market rents and user costs for owner occupied housing," Journal of Housing Economics, Elsevier, vol. 18(3), pages 273-279, September.
    22. Gonzalez-Navarro, Marco & Quintana-Domeque, Climent, 2009. "The reliability of self-reported home values in a developing country context," Journal of Housing Economics, Elsevier, vol. 18(4), pages 311-324, December.
    23. Björklund Anders & Jäntti Markus & Solon Gary, 2007. "Nature and Nurture in the Intergenerational Transmission of Socioeconomic Status: Evidence from Swedish Children and Their Biological and Rearing Parents," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(2), pages 1-23, November.
    24. Helena Holmlund & Mikael Lindahl & Erik Plug, 2011. "The Causal Effect of Parents' Schooling on Children's Schooling: A Comparison of Estimation Methods," Journal of Economic Literature, American Economic Association, vol. 49(3), pages 615-651, September.
    25. Espen Bratberg & Jonathan Davis & Bhashkar Mazumder & Martin Nybom & Daniel D. Schnitzlein & Kjell Vaage, 2017. "A Comparison of Intergenerational Mobility Curves in Germany, Norway, Sweden, and the US," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(1), pages 72-101, January.
    26. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
    27. Kudrna, George & Woodland, Alan, 2011. "An inter-temporal general equilibrium analysis of the Australian age pension means test," Journal of Macroeconomics, Elsevier, vol. 33(1), pages 61-79, March.
    28. Bjorklund, Anders & Chadwick, Laura, 2003. "Intergenerational income mobility in permanent and separated families," Economics Letters, Elsevier, vol. 80(2), pages 239-246, August.
    29. Cho, Sang-Wook (Stanley) & Sane, Renuka, 2013. "Means-Tested Age Pensions And Homeownership: Is There A Link?," Macroeconomic Dynamics, Cambridge University Press, vol. 17(6), pages 1281-1310, September.
    30. Judith Yates, 2016. "Why Does Australia Have an Affordable Housing Problem and What Can Be Done About It?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 49(3), pages 328-339, September.
    31. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    32. Onrubia, Jorge & Rodado, M. Carmen & Ayala, Luis, 2009. "How do services of owner-occupied housing affect income inequality and redistribution?," Journal of Housing Economics, Elsevier, vol. 18(3), pages 224-232, September.
    33. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
    34. Peter Saunders & Peter Siminski, 2005. "Home Ownership And Inequality: Imputed Rent And Income Distribution In Australia," Economic Papers, The Economic Society of Australia, vol. 24(4), pages 346-367, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tomas Kennedy & Peter Siminski, 2022. "Are We Richer than Our Parents Were? Absolute Income Mobility in Australia," The Economic Record, The Economic Society of Australia, vol. 98(320), pages 22-41, March.
    2. Liang, Jian & Alexeev, Sergey, 2023. "Harm reduction or amplification? The adverse impact of a supervised injection room on housing prices," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    3. Denisa Naidin & Sofie R. Waltl & Michael Ziegelmeyer, 2022. "Objectified Housing Sales and Rent Prices in Representative Household Surveys: the Impact on Macroeconomic Statistics," LISER Working Paper Series 2022-03, Luxembourg Institute of Socio-Economic Research (LISER).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Markus Jäntti & Stephen P. Jenkins, 2013. "Income Mobility," SOEPpapers on Multidisciplinary Panel Data Research 607, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Frick, Joachim R. & Grabka, Markus M. & Smeeding, Timothy M. & Tsakloglou, Panos, 2010. "Distributional Effects of Imputed Rents in Five European Countries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 19(3), pages 167-179.
    3. Carlos Felipe Balcázar & Lidia Ceriani & Sergio Olivieri & Marco Ranzani, 2017. "Rent‐Imputation for Welfare Measurement: A Review of Methodologies and Empirical Findings," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 881-898, December.
    4. Sander Wagner, 2017. "Children of the Reunification: Gendered Effects on Intergenerational Mobility in Germany," Working Papers 2017-03, Center for Research in Economics and Statistics.
    5. Amaral, Ernesto F. L. & Yen, Shih-Keng & Wang, Sharron Xuanren, 2019. "A meta-analysis of the association between income inequality and intergenerational mobility," OSF Preprints 8qmhw, Center for Open Science.
    6. Marie Connolly & Catherine Haeck, 2024. "Intergenerational income mobility trends in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(1), pages 5-26, February.
    7. Chen, Wen-Hao & Ostrovsky, Yuri & Piraino, Patrizio, 2017. "Lifecycle variation, errors-in-variables bias and nonlinearities in intergenerational income transmission: new evidence from Canada," Labour Economics, Elsevier, vol. 44(C), pages 1-12.
    8. Daniel D. Schnitzlein, 2016. "A New Look at Intergenerational Mobility in Germany Compared to the U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(4), pages 650-667, December.
    9. Anja Gaentzsch & Gabriela Zapata Román, 2018. "More educated, less mobile? Diverging trends in income and educational mobility in Chile and Peru," Global Development Institute Working Paper Series 312018, GDI, The University of Manchester.
    10. Tang, Le & Sun, Shiyu & Yang, Weiguo, 2021. "Does government education expenditure boost intergenerational mobility? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 13-22.
    11. Robert Lucas & Sari Kerr, 2013. "Intergenerational income immobility in Finland: contrasting roles for parental earnings and family income," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1057-1094, July.
    12. Bertha Rohenkohl, 2019. "Intergenerational Income Mobility in the UK:New evidence using the BHPS and Understanding Society," Working Papers 2019017, The University of Sheffield, Department of Economics.
    13. Florencia Torche, 2015. "Analyses of Intergenerational Mobility," The ANNALS of the American Academy of Political and Social Science, , vol. 657(1), pages 37-62, January.
    14. Peter Siminski & Sin Hung (Timothy) Yu, 2022. "The Correlation of Wealth Between Parents and Children in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(2), pages 195-214, June.
    15. Figari, Francesco & Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos & Verbist, Gerlinde & Zantomio, Francesca, 2012. "Taxing Home Ownership: Distributional Effects of Including Net Imputed Rent in Taxable Income," IZA Discussion Papers 6493, Institute of Labor Economics (IZA).
    16. Leone, Tharcisio, 2019. "The geography of intergenerational mobility: Evidence of educational persistence and the "Great Gatsby Curve" in Brazil," GIGA Working Papers 318, GIGA German Institute of Global and Area Studies.
    17. Coban, Mustafa & Sauerhammer, Sarah, 2017. "Transmission channels of intergenerational income mobility: Empirical evidence from Germany and the Unites States," Discussion Paper Series 138, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    18. Anna Christina D'Addio, 2007. "Intergenerational Transmission of Disadvantage: Mobility or Immobility Across Generations?," OECD Social, Employment and Migration Working Papers 52, OECD Publishing.
    19. Lijie Song, 2021. "Does Public Investment Promote Intergenerational Mobility? Who Really Benefits?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 158(1), pages 59-80, November.
    20. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1553-1623.

    More about this item

    Keywords

    Intergenerational mobility; Income mobility; Rental income;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jhouse:v:49:y:2020:i:c:s1051137720300462. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622881 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.