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Housing and children: simultaneous decisions?—a cohort study of young adults’ housing and family formation decision

Abstract

This study contributes to earlier research on homeownership and childbearing by taking into account the potential simultaneity between these two life events. A dataset comprising three different Swedish birth cohorts suggests that these are events that are indeed simultaneous. Different tests indicate that taking this simultaneity into account gives an overall statistically significant improvement of the model fit. However, this result is most obvious for those young adults who faced increasing problems on the housing market. The childbearing decision of these cohorts also seems to be more sensitive to changes in the user cost.

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Fig. 1

Notes

  1. http://www.scb.se/Pages/TableAndChart____74164.aspx, accessed 2009–09–02.

  2. Homeownership is here synonymous with detached or terraced housing since owner occupation/homeownership was only possible in single-family as well as terraced houses in Sweden before 2009. Today, there is a small number of owner occupied flats in Sweden but they are not included in this study since the time period of this analysis embraces the year 2003 at most.

  3. The Million Program was a housing program that was implemented in Sweden in 1965 and its construction took place in 1965–1974. The aim of the program was to build a million dwellings in a 10-year period to ensure that all citizens could have a home at a reasonable price.

  4. Tenant-ownership requires a membership in a housing cooperative association which is obtained through a capital investment and maintained by monthly charges to cover the cost of the association’s loans as well as the operating costs. The members do not have full ownership rights and obligations but are allowed to sell their dwelling on the market.

  5. http://www.scb.se/Pages/TableAndChart____74164.aspx, accessed October 29, 2009.

  6. http://www.skl.se/artikel.asp?A = 11248&C = 445, accessed October 29, 2009.

  7. The Million Program was a housing program that was implemented in Sweden in 1965. The aim of the program was to build a million dwellings in a 10-year period to ensure that all citizens could have a home at a reasonable price.

  8. The models have also been estimated by including the user cost as a separate variable in the house choice model together with dummy variables for the municipalities but this did not alter the result.

  9. We have also included dummy variables for the municipalities. It was only the estimated coefficient for metropolitan municipalities that was significant. However, it became insignificant when including the unemployment rates in the model.

  10. All models have also been estimated by excluding the variable controlling for students as well as tenant-ownerships. This did not have any crucial effect on the estimated coefficients and, moreover, no effect on the cross-equation correlation coefficient ρ. We have also included variables controlling for educational level but none of these variables were significant. Furthermore, since they could also be argued to be correlated with household disposable income and the student variable, they were excluded from the model.

    Since being a tenant-owner to a certain degree implies an opportunity to have an influence on the housing situation, the analysis has been made (not presented here but the result can be received from the author upon request) by including tenant-owning in the category homeownership, i.e., the outcome variable “becoming a homeowner” includes tenant-ownership, detached single-family houses as well as terraced houses and multi-family houses then only refer to rental apartments. The result showed a significant (at the 5 percent level) cross-equation correlation coefficient ρ equal to 0.12 for cohort 74. However, ρ for cohorts 64 and 56 was close to zero and insignificant.

  11. I am grateful to an anonymous referee that pointed out this interpretation.

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Acknowledgements

I am grateful to Thomas Lindh, Henry Ohlsson, Olle Westerlund, Matz Dahlberg, Rune Wigren, Jim Kemeny, and two anonymous referees for valuable guidance. I would also like to thank Sara Ström who have initiated and designed the dataset HOLK. Financial support from the Swedish National Insurance Board is also acknowledged.

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Correspondence to Cecilia Enström Öst.

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Öst, C.E. Housing and children: simultaneous decisions?—a cohort study of young adults’ housing and family formation decision. J Popul Econ 25, 349–366 (2012). https://doi.org/10.1007/s00148-010-0345-5

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Keywords

  • Housing
  • Childbearing
  • Simultaneity

JEL Classification

  • R21