Project Details
Projekt
Families, Housing Decisions and Housing Policies
Applicants
Professor Dr. Leo Kaas; Professor Dr. Alexander Ludwig
Subject Area
Economic Theory
Economic Policy, Applied Economics
Economic Policy, Applied Economics
Term
since 2022
Project identifier
Deutsche Forschungsgemeinschaft (DFG) - Project number 462655750
The family composition and changes thereof are key determinants of households’ housing decisions. For instance, the number and ages of children, or the co-residence with relatives affect the household’s preference for size, building type and location of the main residence. The relative scarcity of housing units for rent or sale in different housing market segments takes an impact on overall housing expenditures of the household and on its decision to own. The latter is further influenced by the household’s borrowing capacity which responds, via financial savings and labor market prospects, to current and past family events. Finally, many factual housing policies are either specifically targeted to families or vary strongly with the household composition.The goal of this research project is to examine the role of the family for households’ housing decisions and to analyze the impact of the housing market and family-housing policies on household wealth accumulation, wealth inequality, intergenerational wealth transmission and welfare. We will develop a structural equilibrium model in which households decide about housing, consumption and labor supply while the family composition varies over the lifecycle. Specifically, we consider a stochastic aging model in which individuals experience marriage, divorce and childbirth events. Next to an aggregate production sector, housing supply is endogenous, so that the house price, the rental rate and the housing stock respond to policy changes. The model will be calibrated to replicate the main relationships between family type, income and housing of households in Germany. The calibrated model will be used to investigate the distributional and welfare impact of housing policies on different household types. We further conduct an empirical evaluation of the impact of housing policies, such as the abolishment of the German first-time home buyer allowance in the year 2005, using causal inference methods and compare the model’s predictions to our empirical findings.
DFG Programme
Research Units
