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Pensions, Income Taxes, And Homeownership: A Cross‐Country Analysis

Author

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  • Hans Fehr
  • Maurice Hofmann
  • George Kudrna

Abstract

The article studies the role of pensions and income taxes in determining homeownership. We develop a stochastic, overlapping generations model with tenure choice and heterogenous skill types calibrated to Germany. Then, we simulate alternative income tax and pension policy structures from the United States and Australia, since these developed nations have similar incomes per capita, but highly different homeownership rates. Our results highlight that the pension system and its financing have decisive long‐term effects on homeownership. The latter is even more significant than income tax, where labor and capital income taxation affect homeownership in opposite directions.

Suggested Citation

  • Hans Fehr & Maurice Hofmann & George Kudrna, 2025. "Pensions, Income Taxes, And Homeownership: A Cross‐Country Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 66(1), pages 143-174, February.
    • Handle: RePEc:wly:iecrev:v:66:y:2025:i:1:p:143-174
    DOI: 10.1111/iere.12723
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    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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