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Sonderforschungsbereich 649: Ökonomisches Risiko, Humboldt-Universität Berlin >
SFB 649 Discussion Papers, HU Berlin >
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http://hdl.handle.net/10419/39309
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| Title: | | Renting versus owning and the role of income risk: The case of Germany  |
| Authors: | | Schulz, Rainer Wersing, Martin Werwatz, Axel |
| Issue Date: | | 2009 |
| Series/Report no.: | | SFB 649 discussion paper 2009,060 |
| Abstract: | | In a world with complete markets and no transactions cost, the decision whether to rent or buy a home is separate from a household's professional income risk. If markets are incomplete and have frictions, however, profession- specific income risk, regional house price risk, and mobility needs will interact and should affect the tenure mode choice. Using panel data from West Germany, we establish homogeneous profession groups and estimate their regional net income risk and regional mobility. We then examine the impact of the risk and mobility variables on the tenure mode decision at the aggregate and the individual household level. We find that the diversification potential of renting affects the tenure mode choice as do mobility needs. |
| Subjects: | | Tenure mode choice background risk household mobility |
| JEL: | | R21 G11 J24 C25 |
| Document Type: | | Working Paper |
| Appears in Collections: | | SFB 649 Discussion Papers, HU Berlin
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