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Borrowing constraints, own labour and homeownership

Author

Listed:
  • Peter Lindner
  • Thomas Y. Mathä
  • Giuseppe Pulina
  • Michael Ziegelmeyer

Abstract

We show that a substantial share of households contributes their own labour to the acquisition of their main residence. These contributions help households faced with credit constraints, since they reduce the need for external financing. We develop a simple theoretical model and show that own labour contributions decrease with the level of financial resources available, while they increase with the mortgage interest rate. These theoretical results are supported by empirical analysis, which also shows that own labour contributions vary by household characteristics (age, gender, profession) and by type of dwelling (house, apartment).

Suggested Citation

  • Peter Lindner & Thomas Y. Mathä & Giuseppe Pulina & Michael Ziegelmeyer, 2023. "Borrowing constraints, own labour and homeownership," Applied Economics, Taylor & Francis Journals, vol. 55(42), pages 4931-4945, September.
    • Handle: RePEc:taf:applec:v:55:y:2023:i:42:p:4931-4945
    DOI: 10.1080/00036846.2022.2133893
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