{"title":"Income stagnation and housing affordability in the United States","authors":"Luke Petach","doi":"10.1080/00346764.2020.1762914","DOIUrl":null,"url":null,"abstract":"Between 1980 and 2016 the share of households in the bottom quintile of the income distribution that owned their own home declined by 10 percentage points. For the same households, the share of monthly income spent on rent increased from 28% in 1960 to over 42% in 2016. To asses the extent to which income stagnation is responsible for the decline in affordability, I use Census microdata to construct counterfactual simulations that capture the evolution of housing market trends under alternative assumptions about the distribution of income. Income stagnation explains nearly the entire decline in affordability for the bottom quintile. Housing market frictions that cause the price of housing to deviate from marginal cost matter more to households further up the income distribution. Using Atkinson-type welfare-based inequality measures, I find that the counterfactual distribution of income – with inequality held constant – results in greater welfare for nearly all possible levels of inequality aversion.","PeriodicalId":46636,"journal":{"name":"REVIEW OF SOCIAL ECONOMY","volume":"80 1","pages":"359 - 386"},"PeriodicalIF":1.6000,"publicationDate":"2020-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/00346764.2020.1762914","citationCount":"3","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"REVIEW OF SOCIAL ECONOMY","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1080/00346764.2020.1762914","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 3
Abstract
Between 1980 and 2016 the share of households in the bottom quintile of the income distribution that owned their own home declined by 10 percentage points. For the same households, the share of monthly income spent on rent increased from 28% in 1960 to over 42% in 2016. To asses the extent to which income stagnation is responsible for the decline in affordability, I use Census microdata to construct counterfactual simulations that capture the evolution of housing market trends under alternative assumptions about the distribution of income. Income stagnation explains nearly the entire decline in affordability for the bottom quintile. Housing market frictions that cause the price of housing to deviate from marginal cost matter more to households further up the income distribution. Using Atkinson-type welfare-based inequality measures, I find that the counterfactual distribution of income – with inequality held constant – results in greater welfare for nearly all possible levels of inequality aversion.
期刊介绍：
For over sixty-five years, the Review of Social Economy has published high-quality peer-reviewed work on the many relationships between social values and economics. The field of social economics discusses how the economy and social justice relate, and what this implies for economic theory and policy. Papers published range from conceptual work on aligning economic institutions and policies with given ethical principles, to theoretical representations of individual behaviour that allow for both self-interested and "pro-social" motives, and to original empirical work on persistent social issues such as poverty, inequality, and discrimination.
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