Labor income uncertainty, skewness and homeownership: A panel data study for Germany and Spain

In this paper we empirically investigate the effect of labor income uncertainty on the probability of homeownership in Germany and Spain. This study is motivated by two facts. Firstly, theoretical models tend to provide ambiguous results on this issue. Secondly, previous empirical evidence focuses e...

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Bibliographic Details
Published in:	Journal of urban economics Vol. 58; no. 1; pp. 156 - 176
Main Author:	Diaz-Serrano, Luis
Format:	Journal Article
Language:	English
Published:	New York Elsevier Inc 01-07-2005 Elsevier Elsevier BV
Series:	Journal of Urban Economics
Subjects:	Credit constraints Home ownership Homeownership Income skewness Income uncertainty Permanent income Risk aversion Transitory income Risk aversion Credit constraints Homeownership J0 Permanent income Transitory income Income skewness D1 Income uncertainty R0
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Summary:	In this paper we empirically investigate the effect of labor income uncertainty on the probability of homeownership in Germany and Spain. This study is motivated by two facts. Firstly, theoretical models tend to provide ambiguous results on this issue. Secondly, previous empirical evidence focuses exclusively on the US housing market. To carry out our analysis we propose more precise income uncertainty measures based on panel data labor income equations. We observe that households facing high levels of income uncertainty display a preference for renting, while those located in more positively skewed income distributions show a greater propensity for homeownership.
ISSN:	0094-1190 1095-9068
DOI:	10.1016/j.jue.2005.03.003