The demand for housing in Sweden: Equilibrium choice of tenure and type of dwelling

Most studies of housing demand and tenure choice only identify two modes of tenure: owner-occupied one-family houses and rental apartments. Furthermore they are typically based on a cross section across all households. In this study we use recent Swedish data to overcome these weaknesses. We identify owner-occupied apartments (coop shares) as a third mode of tenure, and show that this should be treated separately. We also use information about the household's own assessment of its probability of moving during the next year. We demonstrate that it makes a large difference if likely movers are eliminated from the sample.     

The impacts of affordable lending efforts on homeownership rates

In this study, we develop and test a methodology to assess the impact of affordable lending efforts on homeownership rates. More narrowly, we examine the impact of using flexible underwriting guidelines, primarily changes in the down payment and housing burden requirements, on the affordability and homeownership propensities of targeted populations and geographic areas. The impacts of changing these underwriting guidelines are compared with those resulting from lower borrowing costs (interest rates). A variation of the methodology first proposed by Wachter et al. (1996) is used in the analysis. We use the 1995 American Housing Survey (AHS) national core in the analysis. The findings indicate that affordable lending efforts are likely to increase homeownership opportunities for underserved populations, but that impacts may not be felt equally by all groups. Under most affordable products, the impacts on all households, recent movers and central city households are smaller than for other households. The recently introduced affordable products which permit the 3% down payment to come from non-borrower sources, e.g., Freddie Mac’s Alt 97, has the largest impact on the homeownership propensities of all underserved groups, including a 27.1% increase in the relative probability of homeownership for young households, a 21.0% increase for blacks, and a 15.0% increase for central city residents. Consistently, changes in underwriting guidelines are found to have greater impacts than changes in the costs of borrowing for all groups.     

Average treatment effects for stayers with correlated random coefficient models of panel data

Correlated random coefficient (CRC) models provide a useful framework for estimating average treatment effects (ATE) with panel data by accommodating heterogeneous treatment effects and flexible patterns of selection. In their simplest form, they lead to the well-known difference-in-differences estimator. CRC models yield estimates of ATE for “movers” (i.e., cross-sectional units whose treatment status changed over time) while ATE for “stayers” (i.e., cross-sectional units who retained the same treatment status over time) are not identified. We study additional restrictions on selection into treatment that lead to the identification of ATE for stayers by an extrapolation from quantities identified by the CRC model. We discuss estimation and testing of the extrapolation's validity, then use our results to estimate the returns to agricultural technology adoption among maize farmers in Kenya.     

Sample Size Considerations for Multilevel Surveys

Social and economic data commonly have a nested structure (for example, households nested within neighborhoods). Recently techniques and computer programs have become available for dealing with such data, permitting the formulation of explicit multilevel models with hypotheses about effects occurring at each level and across levels. If data users are planning to analyze survey data using multilevel models rather than concentrating on means, totals, and proportions, this needs to be accounted for in the survey design. The implications for determining sample sizes (for example, the number of neighborhoods in the sample and the number of households sampled within each neighborhood) are explored.     

Housing demand and disequilibrium

Researchers have recently begun relying heavily on samples of recent movers to estimate housing demand parameters. Estimates from mover, equilibrium, and disequilibrium samples are compared to determine whether significant differences exist. The results suggest that income elasticities are not affected by the sample distinctions, but demographic effects vary across the different subsamples.     

Effects of residential relocation on household and commuting expenditures in Shanghai, China

Over the past three decades, China's cities have undergone massive spatial restructuring in the wake of market reforms and economic growth. One consequence has been a rapid migration of urban residents to the periphery. Some movers have been forced out either by rising urban rents or government reclamation of their residences. Others have relocated willingly to modernized housing or for other lifestyle reasons. This article examines the effects of relocation to the urban edge on household well-being. It explores the factors underlying changes in housing and transportation costs as households move to the periphery. The research also examines whether those who moved involuntarily are affected differently from those who moved by choice. Results show that, relative to those who moved by choice, involuntary movers are disproportionately and adversely affected in terms of job accessibility, commute time, housing consumption and disposable income. The findings also show that, compared with higher-income households, lower-income groups are disproportionately affected in relation to housing costs, accessibility losses, disposable income and household worker composition. These results indicate that relocation compensation for involuntarily relocated households should be expanded to include more than just housing value: it should encompass urban location changes, household needs and relocation costs.     

Residential search and choice of displaced households

Centrographic analysis is used to compare the residential search and choice behavior of 41 households who experienced either short-term or long-term displacement costs after moving out of the inner city of Saskatoon, with the behavior of 90 households who moved as if voluntarily. While the displaced households tended to search for housing in the same neighbourhoods as the voluntary movers, they chose a “new” home much farther away from their “old” home. By means of a logistic regression, the reasons for this more distant move are inferred to reflect both the tightness of the housing market and the housing search barriers that displaced households, who were more likely to be young or old renters, would have encountered.     

Endogenous household interaction

Most econometric models of intrahousehold behavior assume that household decision making is efficient, i.e., utility realizations lie on the Pareto frontier. In this paper, we investigate this claim by adding a number of participation constraints to the household allocation problem. Short-run constraints ensure that each spouse obtains a utility level at least equal to what they would realize under (inefficient) Nash equilibrium. Long-run constraints ensure that each spouse obtains a utility level at least equal to what they would realize by cheating on the efficient allocation and receiving Nash equilibrium payoffs in all successive periods. Given household characteristics and the (common) discount factor of the spouses, not all households may be able to attain payoffs on the Pareto frontier. We estimate these models using a Method of Simulated Moments estimator and data from one wave of the Panel Study of Income Dynamics. We find that both short- and long-run constraints are binding for sizable proportions of households in the sample. We conclude that it is important to carefully model the constraint sets household members face when modeling household allocation decisions, and to allow for the possibility that efficient outcomes may not be implementable for some households.     

Labor force migration, non-labor force migration, and non-employment reasons for migration

This paper documents the extent and nature of non-employment factors in migration. The labor force status of over 18 million recent interstate migrants in the United States and stated reasons for moving reported in several surveys in the U.S. are examined. Labor force migrants are heterogeneous in terms of the relationships between acquisition of employment and the migration decision, and in terms of the influence of decision makers outside of the migrant household including firms and the government. Numerically important categories of migrants not traditionally captured in migration models exist, including the elderly, the military, and movers from abroad. Whereas non-employment reasons are secondary to employment reasons for a majority of labor force migrants, non-employment factors are singularly important or operate in combination with employment factors for the majority of all migrants. The heterogeneity of migrant types and migration reasons needs to be better captured in migration models.     

Estimation of econometric models of some discrete games

This paper discusses, estimates and compares some microeconometric models for simultaneous discrete endogenous variables. The models are based on the assumption that observed endogenous variables represent the outcome of a static discrete game. I discuss models based on non-cooperative equilibrium concepts (Nash, Stackelberg), as well as models which presume Pareto optimality of observed outcomes. The models are estimated using data on the joint labor force participation decisions of husbands and wives in a sample of Dutch households.     

Strategic Choice and Performance in Late Movers: Influence of the Top Management Team's External Ties

This work examines how the strategic choice and performance of late movers are influenced by the top management team's external ties, inside and outside the firm's industry. Using a multiyear sample of firms from the computer industry, we found that intra-industry trade-association ties of top managers led to the adoption of a resource-imitation strategy by late movers while extra-industry importation and professional-association ties led to the adoption of a resource-substitution strategy. We also found that trade association ties had a negative effect on the performance of late movers using resource-substitution, while top managers' service on other firms' boards had a positive influence on the performance of those firms. Our findings not only confirm the importance of the role of fit in strategy and performance, but they also highlight the importance of the management and control of boundary-spanning activities.     

A psychometric analysis of residential location

Traditional housing needs studies focus on the trade-off between location and housing amenities. In most models, mode choice is viewed as conditional behavior in a given setting. New movers, however, select a new environment which includes a house, neighbourhood and transportation system. By using psychometric techniques, the attitudes and preferences of new movers to the suburbs of a large northeast city were analyzed to determine the relative importance in their selection process of the transportation characteristics of the new location. It was found that local and regional transportation and public transit played little role in selecting an apartment. There was no evidence of tradeoffs between travel time and living space postulated by urban economics. Most important to the choice process of these residents were internal characteristics of the apartment and pricing issues. This supports the idea that suburbanites chose to be captive auto users even when equivalent housing opportunities with transport alternatives are available. Implications for public transit and land use planning alternatives for the suburbs are discussed.     

On the Epidemiological Microfoundations of Sticky Information*

We estimate and compare two models in which households periodically update their expectations. The first model assumes that households update their expectations towards survey measures. In the second model, households update their expectations towards rational expectations (RE). While the literature has used these specifications indistinguishably, we argue that there are important differences. The two models imply different updating probabilities, and the data seem to prefer the second one. We then analyse the properties of both models in terms of mean expectations, median expectations, and a measure of disagreement among households. The model with periodical updates towards RE also seems to fit the data better along these dimensions.     

Bubble-like housing boom–bust cycles: Evidence from the predictive power of households’ expectations

This study examines the role of households’ expectations in predicting the housing boom–bust cycles in the United States. It incorporates two nonlinear features of housing price dynamics: a threshold co-movement between households’ expectations and housing price growth and a structural break in their interrelation. It uses the monthly good-time-to-buy (GTTB) index as a proxy for households’ expectations about the U.S. housing market, and employs the structural break threshold vector autoregression (SBTVAR) to specify breakpoints in housing market dynamics during the recent decades. The findings indicate that shifts in interactions between households’ expectations and housing price growth are synchronous with the recent housing boom–bust cycles. The SBTVAR framework outperforms other models as it captures more of the housing market's unique dynamic characteristics. The GTTB index, which governs expectation regime-switching patterns, is able to signal the recent housing bust three periods in advance.     

INTRAHOUSEHOLD INEQUALITY AT DIFFERENT WELFARE LEVELS: ENERGY INTAKE AND ENERGY EXPENDITURE DATA FROM THE PHILIPPINES*

ABSTRACTS This paper investigates the relationship between intrahousehold inequality and levels of household welfare. Under certain conditions it is demonstrated — with both the unitary model of the household and with some collective models — that the relationship between household welfare and inequality within the household can have an inverted u-shape. Using two sets of calorie adequacy data from a sample of 455 households in the Philippines, a spline analysis is used to test the hypothesis that inequality within the household first increases and then decreases as per capita household total expenditure increases. The two sets of calorie adequacy data are based on repeated 24- hour recalls of dietary intake, and on calorie requirements that are unadjusted and then adjusted for individual activity patterns. Results indicate that once activity patterns are accounted for, calorie intake shortfalls are borne fairly equally within the household at all per capita household total expenditure levels.     

A comparison of four methods for projecting households

"The purpose of this paper is to extend the headship rate method for projecting households to encompass both sexes. Four models are considered that explicitly incorporate the impact of changes in the number of men and women on the number and joint age distribution of husband-wife households. The models are applied to the Philippines using data from the 1988 National Demographic Survey to project households to 2010. The models are also evaluated by 'backcasting' and comparing the results with special tabulations from the 1970 and 1980 censuses and the 1975 National Demographic Survey."     

The demand for rental housing: Evidence from the Housing Allowance Demand Experiment

This paper provides new evidence on the price and income elasticities of demand for rental housing by low income households. Housing expenditures of households participating in the Housing Allowance Demand Experiment and receiving housing allowances in the form of a proportional rent rebate are analyzed. These rent rebates experimentally vary the effective relative price of housing and thus enable estimation of the price elasticities. Natural income variation enables estimation of income elasticities. Analysis is carried out using two functional forms and a variety of models of housing dynamics. The estimated income and price elasticities of demand are 0.36 and −0.22, respectively. When the sample is restricted to include only households headed by couples, the elasticity estimates are 0.47 for income and −0.36 for price. These estimates are lower (in absolute value) than have been previously estimated and it is suggested that this may be due to the low-income nature of the sample.     

Cash in Your Face: The Cost of Racial and Ethnic Discrimination in Housing

According to recent evidence, racial and ethnic discrimination in housing continues to be widespread. This paper estimates the cost this discrimination imposes on black and Hispanic households. Building on the work of4, the paper develops a housing search model and measures the cost of discrimination by its impact on the gain a household can achieve through housing search. The cost of discrimination is then calculated for a representative sample of households. The punchline: Black and Hispanic households pay a discrimination “tax” of almost $4,000, on average, every time they search for a house to buy.     

Nonlinear IV unit root tests in panels with cross-sectional dependency

We propose a unit root test for panels with cross-sectional dependency. We allow general dependency structure among the innovations that generate data for each of the cross-sectional units. Each unit may have different sample size, and therefore unbalanced panels are also permitted in our framework. Yet, the test is asymptotically normal, and does not require any tabulation of the critical values. Our test is based on nonlinear IV estimation of the usual augmented Dickey–Fuller type regression for each cross-sectional unit, using as instruments nonlinear transformations of the lagged levels. The actual test statistic is simply defined as a standardized sum of individual IV t-ratios. We show in the paper that such a standardized sum of individual IV t-ratios has limit normal distribution as long as the panels have large individual time series observations and are asymptotically balanced in a very weak sense. We may have the number of cross-sectional units arbitrarily small or large. In particular, the usual sequential asymptotics, upon which most of the available asymptotic theories for panel unit root models heavily rely, are not required. Finite sample performance of our test is examined via a set of simulations, and compared with those of other commonly used panel unit root tests. Our test generally performs better than the existing tests in terms of both finite sample sizes and powers. We apply our nonlinear IV method to test for the purchasing power parity hypothesis in panels.     

Wealth dynamics: reducing noise in panel data

Although the asset data from the Health and Retirement Study (HRS) is of very high quality, there is sufficient noise to frustrate attempts to study saving behaviour by examining wave‐to‐wave change in wealth. In this research, we attempt to reduce noise by means of reactive‐dependent interviewing in which respondents with large inexplicable changes in assets between 1998 and 2000 are called back by HRS interviewers, presented with their prior reports and asked to reconcile the data. We achieved reconciliation for 1255 households (2479 net‐worth components) and, as a result, the variance in measured change for the entire sample of 11,583 households with the same financial respondents in both waves was cut in half. The empirical validity of the data also appears to have been improved. The correlation of gross change in net worth and income, for instance, increased from an insignificant negative to a highly significant positive value. Although reconciliation of large asset changes marginally improves the goodness of fit of multivariate models, there remains sufficient noise in the asset‐change data to require analysts to employ additional methods to reduce the influence of outliers. Copyright © 2006 John Wiley & Sons, Ltd.