Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/273530 
Year of Publication: 
2023
Series/Report no.: 
ECON WPS - Working Papers in Economic Theory and Policy No. 01/2023
Publisher: 
TU Wien, Institute of Statistics and Mathematical Methods in Economics, Research Unit in Economics, Vienna
Abstract: 
Homeownership rates differ widely across European countries. We document that part of this variation is driven by differences in the fraction of adults co-residing with their parents. Comparing Germany and Italy, we show that in contrast to homeownership rates per household, homeownership rates per individual are very similar during the first part of the life cycle. To understand these patterns, we build an overlapping-generations model where individuals face uninsurable income risk and make consumption-saving and housing tenure decisions. We embed an explicit intergenerational link between children and parents to capture the three-way trade-off between owning, renting, and co-residing. Calibrating the model to Germany we explore the role of income profiles, housing policies, and the taste for independence and show that a combination of these factors goes a long way in explaining the differential life-cycle patterns of living arrangements between the two countries.
Subjects: 
Homeownership
Co-residence
Overlapping generations
JEL: 
D15
E21
H31
R21
Document Type: 
Working Paper

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