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  3. American Economic Journal: Macroeconomics
  4. January 2024
  5. Homeownership and Portfolio Choice over the Generations

American Economic Journal:
Macroeconomics

ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)

Homeownership and Portfolio Choice over the Generations

  • Gonzalo Paz-Pardo
American Economic Journal: Macroeconomics
vol. 16, no. 1, January 2024
(pp. 207–37)
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Abstract

Earnings are riskier and more unequal for households born in the 1960s and 1980s than for those born in the 1940s. Despite improvements in financial conditions, younger generations are less likely to be living in their own homes than older generations at the same age. By using a life cycle model with housing and portfolio choice that includes flexible earnings risk and aggregate asset price risk, I show that changes in earnings dynamics account for a large part of the reduction in homeownership across generations. Lower-income households find it harder to buy housing and, as a result, accumulate less wealth.

Citation

Paz-Pardo, Gonzalo. 2024. "Homeownership and Portfolio Choice over the Generations." American Economic Journal: Macroeconomics, 16 (1): 207–37. DOI: 10.1257/mac.20200473

Additional Materials

JEL Classification

  • D15 Intertemporal Household Choice; Life Cycle Models and Saving
  • G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
  • J31 Wage Level and Structure; Wage Differentials
  • R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
  • R31 Housing Supply and Markets
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