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Did the Modern Mortgage Set the Stage for the U.S. Baby Boom?

Author

Listed:
  • Lisa J. Dettling
  • Melissa Schettini Kearney

Abstract

This paper proposes that the adoption of the modern U.S. mortgage (i.e., low down payment, long-term, and fixed-rate)—led by the Federal Housing Administration (FHA) and Veteran’s Administration (VA) loan insurance programs—set the stage for the mid-twentieth century U.S. baby boom by dramatically raising rates of home ownership for young families. Using newly digitized data on FHA- and VA- backed loan issuance and births by state-year, and a novel instrumental variables strategy that isolates supply-side variation in loan issuance, we find that the FHA and VA mortgage insurance programs led to 3 million additional births from 1935-1957, roughly 10 percent of the excess births in the baby boom. Aggregate effects mask differences by group—we find no effects of FHA/VA lending on births for Nonwhite women, consistent with well-documented racial discrimination in these lending programs. Our results highlight the importance of access to home ownership for fertility decisions.

Suggested Citation

  • Lisa J. Dettling & Melissa Schettini Kearney, 2025. "Did the Modern Mortgage Set the Stage for the U.S. Baby Boom?," NBER Working Papers 33446, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33446
    Note: CH DAE LS ME PE
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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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