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Identifying the Benefits from Homeownership: A Swedish Experiment

Author

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  • Paolo Sodini
  • Stijn Van Nieuwerburgh
  • Roine Vestman
  • Ulf von Lilienfeld-Toal

Abstract

Homeownership is widely stimulated by policy yet its economic effects are poorly understood. We exploit quasi-random variation in homeownership generated by privatization decisions of municipally-owned buildings, and use granular data on demographics, income, housing, financial wealth, and debt that allow us to construct high-quality measures of spending. Homeownership causes wealth building via house price appreciation, increases consumption, and improves consumption smoothing across time and states of the world through a collateral effect. It increases mobility for young households, who move up the property ladder, and amplifies wealth accumulation for older households, who take more risk in their financial portfolio.

Suggested Citation

  • Paolo Sodini & Stijn Van Nieuwerburgh & Roine Vestman & Ulf von Lilienfeld-Toal, 2016. "Identifying the Benefits from Homeownership: A Swedish Experiment," NBER Working Papers 22882, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:22882
    Note: AP CF EFG LS PE POL
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    Cited by:

    1. Li, Jieying & Zhang, Xin, 2017. "House Prices, Home Equity, and Personal Debt Composition," Working Paper Series 343, Sveriges Riksbank (Central Bank of Sweden).
    2. Ch.-M. CHEVALIER & R. LARDEUX, 2017. "Homeownership and labor market outcomes: disentangling externality and composition effects," Documents de Travail de l'Insee - INSEE Working Papers g2017-09, Institut National de la Statistique et des Etudes Economiques.
    3. Bratu, Cristina & Bolotnyy, Valentin, 2023. "Immigrant intergenerational mobility: A focus on childhood environment," European Economic Review, Elsevier, vol. 151(C).
    4. Goodman, Sarena & Isen, Adam & Yannelis, Constantine, 2021. "A day late and a dollar short: Liquidity and household formation among student borrowers," Journal of Financial Economics, Elsevier, vol. 142(3), pages 1301-1323.
    5. Marco Di Maggio & Amir Kermani & Kaveh Majlesi, 2020. "Stock Market Returns and Consumption," Journal of Finance, American Finance Association, vol. 75(6), pages 3175-3219, December.
    6. Broulíková, Hana M. & Huber, Peter & Montag, Josef & Sunega, Petr, 2020. "Homeownership, mobility, and unemployment: Evidence from housing privatization," Journal of Housing Economics, Elsevier, vol. 50(C).
    7. Korevaar, Matthijs, 2023. "Reaching for yield and the housing market: Evidence from 18th-century Amsterdam," Journal of Financial Economics, Elsevier, vol. 148(3), pages 273-296.
    8. Deeksha Gupta, 2018. "Too Much Skin-in-the-Game? The Effect of Mortgage Market Concentration on Credit and House Prices," 2018 Meeting Papers 512, Society for Economic Dynamics.
    9. Samuel Ligonnière & Salima Ouerk, 2024. "The unequal distribution of credit: Is there any role for monetary policy?," Working Papers of BETA 2024-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    10. Wold, Ella Getz & Aastveit, Knut Are & Brandsaas, Eirik & Juelsrud, Ragnar & Natvik, Gisle, 2024. "The housing channel of intergenerational wealth persistence," CEPR Discussion Papers 18888, C.E.P.R. Discussion Papers.
    11. Richard Disney & John Gathergood & Stephen Machin & Matteo Sandi, 2023. "Does Homeownership Reduce Crime? A Radical Housing Reform from the UK," The Economic Journal, Royal Economic Society, vol. 133(655), pages 2640-2675.
    12. Disslbacher, Franziska & Rapp, Severin, 2024. "Leaving Legacies and Liabilities: The Distribution of Wealth at Death," SocArXiv z3wfv, Center for Open Science.
    13. Scott R. Baker & Lorenz Kueng & Steffen Meyer & Michaela Pagel, 2018. "Measurement Error in Imputed Consumption," NBER Working Papers 25078, National Bureau of Economic Research, Inc.
    14. Asaf Bernstein, 2021. "Negative Home Equity and Household Labor Supply," Journal of Finance, American Finance Association, vol. 76(6), pages 2963-2995, December.
    15. Disslbacher, Franziska & Rapp, Severin, 2024. "Leaving Legacies and Liabilities: The Distribution of Wealth at Death," OSF Preprints y9xt3, Center for Open Science.
    16. Stepan Mikula & Josef Montag, 2019. "Does homeownership hinder labor market activity? Evidence from housing privatization and restitution in Brno," MUNI ECON Working Papers 2019-06, Masaryk University, revised Feb 2023.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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