Earnings Uncertainty, risk-Aversion and Homeownership

Ea nings Unce ain y, Risk-A e sion and Homeowne ship♣ Luis Diaz-Se ano Na ional Uni e si y o I eland Maynoo h CREB and IZA Abs ac : In his pape we in es iga e he e ec o labou income unce ain y on he p obabili y o homeowne ship in Ge many and Spain. This s udy is mo i a ed by wo ac s. Fi s ly, heo e ical models end o p o ide ambiguous esul s in his issue. Secondly, he e is limi ed p e ious empi ical e idence and he exis ing ocuses exclusi ely on he US housing ma ke . We claim ha mo e in e na ional e idence is necessa y in o de o disen angle his puzzle. We de elop a simple heo e ical o mula ha highligh s he pi o al ole o isk a i udes in he housing enu e decisions ha also allow us o in oduce he concep o “skewness a ec ion” as a ele an phenomenon. To ca y ou his es we p opose an income unce ain y measu e based on panel da a labou income equa ions. We obse e ha households acing inc easing income unce ain y display p e e ence o en ing while hose loca ed in a posi i ely skewed income dis ibu ion show a g ea e p opensi y o homeowne ship. Income unce ain y analysis in housing decisions has impo an implica ions o he design o public housing policies and also o he design o p i a e mo gage insu ance p oduc s. Keywo ds: Risk a e sion, skewness a ec ion, homeowne ship, ea nings unce ain y, ansi o y shocks in income, c edi cons ain s. JEL classi ica ion: D1, R0, J0. Co esponding au ho : Na ional Uni e si y o I eland, Maynoo h Depa men o Economics Co. Kilda e, I eland. E-mail: [email protected] Tel: 353-1-7083728 | Fax: 353-1-7083934 ♣Commen s om Donal O’Neil, Alexand ina P. S oyano a and Oli e Swee man a e g a e ully acknowledged. 1. In oduc ion The de e minan s o he households’ housing enu e choice ha e been ex ensi ely analyzed in he economic li e a u e. Among hese de e minan s, om a heo e ical poin o iew, unce ain ies aced by he households du ing he planning pe iod ha e ecei ed conside able a en ion. I is well known ha housing is a consump ion good, o which he amoun pu chased canno be easily al e ed in esponse o luc ua ions in income. As a consequence o his lack o lexibili y in he esponse o income shocks, unce ain y in u u e income u ns ou o be one o he mos ele an a iable in he decision o homeowne ship. On one hand, bo owe s acing g ea e income unce ain y may su e se e e es ic ions o access o he mo gage ma ke . On he o he hand, e en i hey access o he c edi ma ke , i could be expec ed ha isk-a e se households will y o a oid mo gage downpaymen s. The e a e wo main sou ces o labou income unce ain y: unemploymen and luc ua ions in income due o ma ke o ces. While hese unce ain ies a e usually accoun ed o in mos o he heo e ical models, he e a e ha dly any empi ical es s. While heo e ical s udies end o p o ide ambiguous p edic ions abou he e ec o income unce ain y on he housing enu e decision, he limi ed empi ical e idence using US da a, sugges s ha his e ec is nega i e. Howe e , empi ical e idence based on one coun y only is no su icien o disen angle he puzzle. Fi s o all, bo h en ing and p ope y housing ma ke s do no beha e iden ically in all de eloped economies. Consequen ly, when aking hei housing decisions, households ace di e en ins i u ional se ings (housing, c edi and labou ma ke ) in each coun y. These ins i u ional di e en ials may gene a e no only di e en a i udes owa ds isk, bu also di e ences in he indi iduals’ pe cep ion o isk in i sel , i.e. wha is pe cei ed as isky in one coun y is no necessa ily pe cei ed as isky in ano he coun y. 1 The exis ing s udies o he impac o income unce ain y on he p obabili y o homeowne ship ocus on he a iance o u u e expec ed income1. In his pape , we ques ion whe he he single use o he a iance is enough o d aw indi iduals’ isk a i udes. Some ecen labou economic li e a u e (see e.g. Ha og and Vij e be g 2002 o Diaz-Se ano e al. 2003) shows ha indi iduals app ecia e posi i ely skewed income dis ibu ions, e en i hey o e a smalle mean. This beha io is due o he ac ha in hese income dis ibu ions he chances o eaching high incomes a e smalle , bu he p obabili y o a big loss is also smalle han in a mo e symme ic income dis ibu ion. In o he wo ds, g ea de ia ions om he mean a e less likely in a mo e posi i ely skewed dis ibu ion. This phenomenon is called “skewness a ec ion”. The hypo hesis exposed abo e is suppo ed by p ospec heo y (Kahneman and T e sky, 1979, 1991), which s a es ha he indi idual’s disu ili y caused by a loss is g ea e han he u ili y caused by a gain. Acco ding o his easoning, isk-a e se households would eel sa e in a posi i ely skewed income dis ibu ion han in a symme ic one, e en i he mo e skewed dis ibu ion o e s a smalle mean. Ou conjec u e is ha isk-a e se households exhibi ing also “skewness a ec ion” a e mo e likely o pu chase hei dwelling, since hei expec a ion o a mo gage downpaymen is smalle . Hence, we conside ha a sui able income unce ain y analysis o he housing enu e choices should accoun o his e ec . In o de o cap u e his beha io , besides using he i s wo momen s o he income dis ibu ion (mean and a iance), we p opose o expand unce ain y analysis on enu e decisions up o he hi d momen (skewness). We de i e his esul om a simple heo e ical o mula and we es i empi ically. We con ibu e o he exis ing li e a u e in wo ways. Fi s ly, we p o ide in e na ional e idence abou he e ec o income unce ain y on he p obabili y o homeowne ship, which can be compa ed wi h he limi ed exis ing p e ious e idence om he US. Secondly, by es ing 1 This li e a u e will be e iewed in he nex sec ion. 2 whe he “skewness-a ec ion” is a ele an phenomenon we shed some ligh in he unde s anding o how homeowne ship is planed and achie ed by he households. To do so, we es ima e a housing enu e choice model o Ge many and Spain using di e en measu es o income isk. The eason we choose hese wo coun ies o he compa a i e analysis is based on he ac ha hey ep esen he wo opposi e ex emes in e ms o labou , c edi and housing ma ke pe o mance among he EU coun ies. Unde s anding o wha ex en income (un)ce ain y, ia bo owe s’ isk-a e sion o lending cons ain s, is a ba ie o homeowne ship has impo an implica ions o he design o public housing policies and also in he design o p i a e mo gage insu ance p oduc s. On one hand, we ask whe he public ins i u ions should subsidize households acing bo owing cons ain s o unde a mo gage downpaymen isk. And on he o he hand, whe he he exis ing p i a e mo gage paymen insu ance ma ke is e icien in i s , co e ing he main households’ income isks, and second, o e ing a o dable p oduc s o he households who ace high a es o income isk The emainde o he pape is s uc u ed as ollows. Sec ion 2 summa izes he exis ing li e a u e. In sec ion 3 we b ie ly o e iew he ins i u ional con ex in Ge many and Spain. In sec ion 4 we p esen he heo e ical amewo k used as baseline o ou empi ical es ima ion. In sec ion 5 we expose he empi ical s a egy. The da a used is desc ibed in sec ion 6. Sec ion 7 epo s he empi ical esul s. Finally, sec ion 8 summa izes and concludes. 2. Li e a u e e iew The e exis a as li e a u e ha conside s unce ain y in he ele an a iables de e mining he p obabili y o homeowne ship. Unce ain ies in house p ices, in u u e in e es a es, in amily composi ion, o in household income is he main ocus o his li e a u e. 3 Ioannides (1979) inds heo e ical suppo o he nega i e ela ionship be ween unce ain y in housing p ices and he p opensi y o own o isk-a e se households. Hende son and Ioannides (1983) in oduce andomness in he capi al gains o loses gene a ed by he in es men in housing. In hei heo e ical model hey p edic ha i households can in es in he capi al ma ke a a ixed a e, en ing becomes mo e a ac i e han owning. Using mac oda a Rosen e al. (1984) show ha inc easing unce ain y in he ela i e p ice o housing p ope y wi h espec o he en ing cos s educes he sha e o homeowne s in he US. In Neu eboom (2003) a compa ison o he cos s and isks o mo gages o owne -occupie s is o e ed. He uses he loan- o-income and loan- o- alue a ios o show isks aced by households in he mo gage ma ke among a selec ed g oup o EU coun ies. He shows ha he isks aced by households among hese coun ies di e ma kedly. The s udies analyzing he e ec o income unce ain y on he p obabili y o homeowne ship a e mainly heo e ical. DeSal o and Eeckhoud (1982) ound ha he p obabili y o unemploymen exe s a nega i e e ec on he homeowne ship decisions. Fu (1995) s a es ha unde he p esence o liquidi y cons ain s he heo e ical ela ionship be ween income unce ain y and housing enu e is ambiguous. Tu nbull e al. (1991) also obse e an ambiguous ela ionship and poin ou ha labou income unce ain y could ha e a non-nega i e e ec i expec ed labou income embodies a compensa ing wage di e en ials o income isk2. Chung and Hau in (2002) speci y a heo e ical model ha also p o ides ambiguous esul s. Howe e hei simula ion s udy shows ha unce ain y in u u e changes in he in luen ial a iables would make households en . Hau in and Gill (1987), Hau in (1991) and Robs e al. (1999) ind empi ical 2 The exis ence o compensa ing wage di e en ials o income isk is well documen ed in he labo economics li e a u e (e.g. King, 1974 and McGold ick, 1995, o he US, Ha og e al., 2003, o Spain, Ge many, The Ne he lands and Po ugal, and Diaz-Se ano e al., 2003, o Denma k). Al hese wo ks p o ide empi ical e idence ha ein o ces he ambigui y in he ela ionship be ween income unce ain y and home owne ship de i ed om hei heo e ical model. 4 e idence ha housing consump ion and he p obabili y o homeowne ship in he US all when income isk inc eases. The s udies analyzing he e ec o p ice unce ain y on homeowne ship, bo h heo e ical and empi ical in na u e, e eal a clea nega i e e ec in his ela ionship. Howe e , as we show abo e, s udies on he e ec o income unce ain y on he p obabili y o homeowne ship, ha we a e in e es ed in, end o display ambiguous esul s. Mo eo e , al hough unequi ocal, empi ical e idence is s ill e y limi ed on ocuses exclusi ely on he US housing ma ke . We ind his is a s ong mo i a ion o he p esen s udy. 3. The ins i u ional con ex in Ge many and Spain 3.1. The housing ma ke The Ge man housing ma ke is cha ac e ized by he la ges p i a e en al sec o among he EU coun ies (see able 1). The pe cen age o en ed dwellings was abou 58% in 1995 and 57% in 1999. The Ge man housing legisla ion has his o ically suppo ed he design o a ac i e policies o p omo e he en ing ma ke . P i a e landlo ds enjoy gene ous ax incen i es i hey o e hei p ope ies in he p i a e en al sec o , and can ecei e subsidized loans i hey do so in he social en al sec o . Local au ho i ies also p o ide an impo an amoun o u ban land o cons uc ing small social en ed la s o he younges and less a o ed popula ion. This p omo ion o he en al ma ke is combined wi h policies ha egula e en al p ices. Be ween 1995 and 1999 he housing cos index o p i a ely en ed dwellings inc eased by a ound 7% only. This scena io explains why in Ge many he housing en al ma ke is a s ong al e na i e o homeowne ship. The e icien managemen o he en al ma ke is ansla ed in o s able p ope y p ices. As a consequence is no su p ising ha he a io o en e s o owne -occupie s emains s able o e ime. 5 Con a y o Ge many, he Spanish housing ma ke displays he highes le el o imbalance be ween enu es among he EU coun ies. The Spanish en al sec o is he smalles in Eu ope (see able 1). In 1995, only 14% o he dwelling s ock was en ed, and his pe cen age ell o 11% in 1999. Unlike Ge many, in he las decades, Spanish housing policies ha e been exclusi ely add essed o p omo e homeowne ship. Nei he he supply no he demand in he en al ma ke has been encou aged in any way. Mo eo e , he exis ing 15% pe sonal income ax- elie o he household’s en ing cos s was abolished wi h he 1998 Pe sonal Income Tax Re o m. As a esul o he lack o incen i es o landlo ds o en Spain epo s he second highes dwelling acancy a e a e G eece, sligh ly abo e 20%. These ine iciencies in he Spanish housing ma ke ha e also lead o a d ama ic inc ease in en al p ices, be ween 1995 and 1999 he en index o p i a e en al dwellings has isen by 24%. In Spain he lack o supply and i s low quali y, added o he high cos s, means ha young households p e e o be owne -occupie s han en e s, acing an agg essi ely high deg ee o indeb edness, e en in he beginning o hei wo king ca ee s when hei labou income may no be e y s able. This scena io pa ially explains why he p opensi y o own is so high in Spain. Inse able 1 he e 3.2. The c edi ma ke Du ing he 1990s, dec easing in e es a es and a high compe i ion among lending ins i u ions s ongly elaxed he accessibili y o he mo gage ma ke in Spain. The 10-15 yea s o mo gage paymen pe iod was ex ended o 25-30 yea s, and he amoun bo owed co e ing 80% o he alue o he dwelling pu chased was augmen ed o abo e 100%, co e ing he alue o he dwelling, he de i ed axes, and he ansac ion cos s. The a e age pending ime be ween he 6 demand and he concession o a mo gage was educed om 3-6 mon hs in he ea ly 1990s o one week in 2000. The unique equi emen he Spanish c edi ins i u ions impose on hei bo owe s is ha hey ha e an employmen . The pu chased dwelling se es by i sel as a gua an ee. These p ac ices in he Spanish mo gage ma ke gi e o c edi impai ed households access o a mo gage loan. Al hough his is a posi i e policy, he e is no public p o ision o de aul mo gage p o ec ion, and p i a e mo gage insu ance p oduc s a e nei he a o dable o hose mos a isk no hey o e a wide co e o he isks. Hence, mos o hese bo owe s ha e a high p obabili y o a mo gage downpaymen i hey expe ience a nega i e shock in income. Such s ong elaxa ion in he accessibili y o he c edi ma ke pa ially explains he “boom” in he Spanish housing ma ke , he second g ea es a e I eland among EU coun ies du ing he la e 1990s. On he con a y, he Ge man mo gage ma ke is gene ally e y conse a i e. The bo owe s ill emains liable and he lende has ecou se o o he asse s o he bo owe , including u u e ea nings. This allows he lende legal ecou se o a p opo ion o he bo owe ’s sala y and o he income. The abili y o seize a po ion o he bo owe ’s ea nings om his employe ac s as a s ong disincen i e o hose households wi h a ela i ely high p obabili y o de aul . Gi en ha he e is no “exi ” op ion, Ge man bo owe s a e gene ally mo e eluc an o assume and agg essi ely high le els o indeb edness (in con as wi h he Spanish ones). Fo ins ance, be ween 1994 and 1996 he pe cen age o households ha expe ienced a mo gage downpaymen changed om 0.8 o0.5% in Ge many, whe eas in Spain hese numbe s mo ed om 8.2 o 5.6%. 3.2. The labou ma ke The poo pe o mance o he Spanish housing ma ke du ing he 1990s, in con as wi h he Ge man one, also coincides wi h a poo pe o mance o he Spanish labou ma ke . Al hough 7 he unemploymen a e has allen om 23% o 15% be ween 1995 and 1999, his igu e s ill emains he highes in he EU. The consequence o his dec ease o he unemploymen a e is a d ama ic inc ease o he sha e o ixed- e m wo ke s and he p eca iousness in wages and wo king condi ions. On he con a y, Ge many has epo ed ela i ely s able a e o unemploymen mo ing om 8.2% in 1995 o 7.9% in 2000 (see able 1). Ano he dominan ea u e o he Spanish labou ma ke is he high le el o wage inequali y. Du ing he 1990s Spain epo ed simila le els o inequali y o he US, which has been conside ed in he las decades as he pa adigm o he unequal labou ma ke , whe eas Ge many has epo ed one o he lowes le els o inequali y among de eloped economies3. The ma ked di e ences in he enu e s uc u es o he housing s ock, in he housing ma ke policies, in he labou ma ke pe o mance and in he accessibili y o he c edi ma ke be ween Spain and Ge many mean ha unce ain y in labou income and a i udes owa ds isk migh di e subs an ially be ween bo h coun ies. 4. Theo e ical amewo k: a simple o mula The decision o homeowne ship is usually modeled as a unc ion o household income, he cos s o owning compa ed o cos s o en ing, and a se o demog aphic a iables (age, household size, e c.). In his sec ion we de elop a simple o mula ha accoun s o he e ec s o labou income unce ain y in he housing enu e choice. We speci y a household u ili y unc ion ha depends on owning and en ing cos s and labou income. Labou income is assumed o be addi i ely decomposable be ween a de e minis ic and s ochas ic componen . Fo he sake o 3 In a c oss-coun y compa ison using he Gini index, B adbu y (1993) epo ed a le el o wage inequali y o 0.3 o he US and o 0.2 o Ge many du ing he la e 1980s and ea ly 1990s. Diaz-Se ano (2001) es ima ed o he same pe iod a Gini alue a ound 0.29 o Spain. 8 - Indi idual’s ansi o y labou income: () 2000 1994 1ˆ exp 7 ii y ε ε = =∑ (10) - Indi idual’s labou income unce ain y: {} 2000 2 2 1994 1ˆ ˆexp( ) 7 ii i y εε σε = =− ∑ (11) - Indi idual’s labou income skewness: {} 2000 3 3 1994 1ˆ ˆexp( ) 7 ii y εε κε = =− ∑i , (12) whe e he exponen ial ans o ma ion is applied in o de o ans e back o money me ic he di e en componen s o he ln(wi ). 6. Da a and a iable cons uc ion 6.1. The da ase The da a comes om he Eu opean Communi y Household Panel (ECHP). In his pape we use he wa es co e ing he pe iod 1994-2000 o Ge many and Spain. Fo he i s h ee wa es (1994-1996), he ECHP iles o Ge many con ain in o ma ion coming om bo h he Ge man Socio Economic Panel (GSOEP) and he ECHP, whe eas o he pe iod (1997-2000) he whole sample comes om he GSOEP. Fo Spain, all he sample pe iod (1994-2000) comes om he o iginal ECHP. The numbe o su eyed households o Ge many anges om 11,175 in 1994 o 5,693 in 2000, and om 7,206 in 1994 o 5,132 in 2000 o Spain. Table 2 displays he di e en sample sizes o each wa e. The ECHP and he GSOEP con ain in o ma ion no only a household, bu also a indi idual le el. The household cha ac e is ics ha we conside ele an o he p esen s udy a e he household size and composi ion, demog aphic cha ac e is ics, income and accommoda ion. The accommoda ion ques ions p o ide in o ma ion abou he ype o dwelling, he yea when he household mo ed he e, en ing cos s and mo gage paymen s. 15 Besides household in o ma ion, we also use pe sonal in o ma ion (age, gende , e c.) and socio- economic cha ac e is ics (employmen s a us, ea nings, educa ion, e c.). Inse able 2 he e 6.2. Sample es ic ions In o de o es ima e labou income unce ain y, we es ic ou sample o he household heads. The e a e wo easons o impose his es ic ion. Fi s ly, as we a e in e es ed in income unce ain y a ising om labou ma ke o ces, o calcula e income isk we need o keep ou o he sou ces o household income ha end o display a e y ansi o y na u e and ha ha e no hing o do wi h ma ke o ces. Secondly, household heads’ labou income is he mos impo an sou ce o income o mos o he households. Thus, he ole i plays in he owne -occupa ion decision is mo e impo an han ha played by o he sou ces o household income. In able 3 we epo he sha e o household head labou income in he o e all household income o Ge many and Spain. Inse able 3 he e Ou endogenous a iable in he enu e choice equa ion (7) is a dummy a iable ha akes 1 i he household is owne -occupie and 0 i he household is a en e . In o de o a oid possible bias in he es ima ed e ec s o he income a iables on he p obabili y o homeowne ship, we impose wo u he es ic ions. Fi s ly, we keep ou o he sample he households ha ha e pu chased he dwelling be o e he ini ial su ey yea , 1994. And second, we do no include he households ha a e ecen owne s bu do no ou s and a mo gage. The aim o hese wo es ic ions is wo old. On one hand, we do no know he households’ cha ac e is ics when de 16 enu e decision is made o hose who bough hei dwelling be o e 1994. Hence, es ic ing ansi ions om en ing o owning du ing he sample pe iod allows ma ching he obse ed household cha ac e is ics wi h he enu e s a us decision. On he o he hand, he enu e s a us o ecen owne s wi hou a mo gage ou s anding has p obably no hing o do wi h he undamen als and he in luen ial a iables assumed o a ec he homeowne ship decision. They may well ha e inhe i ed he dwelling o ha e ecei ed a ee allowance ou -o -pocke . Al hough his is a small ac ion o ou sample, keeping hese households in he sample could obscu e he ela ionship be ween he income a iables and he p obabili y o homeowne ship. 6.3. Va iables The ma ix Xi used o es ima e household head’s labou income equa ion (8) con ains he ollowing se o a iables; gende , educa ion, labou expe ience and i s squa ed, enu e and i s squa ed, weekly wo king hou s and he ype o labou con ac . To es ima e en ing and owning cos s used in he housing enu e choice equa ion (7) we use he eal a e age mon hly en and he eal mon hly mo gage paymen s8 compu ed o each egion (NUTS)9. Pe manen income (ypi), ansi o y income (y ε I), income unce ain y ( σ ε i2), and income skewness ( κ ε 3) a e es ima ed as de ined in exp essions (9) o (12). The emaining a iables in he choice equa ion (7) a e de ined in able 4. Among hem, we accoun o household head’s unemploymen his o y, household size, household’s capi al income, and some household head’s demog aphic cha ac e is ics such age 8 The li e a u e p o ides al e na i e ways o compu e he owne cos s based on subjec i e app ecia ion in ol ing mo gage a es, p ope y ax, loan- o- alue a ios o house p ice in la ion among o he s (see e.g. Rosen, 1979; Hende son and Ioannides, 1987; Hau in e al., 1994). Because ou da a lack mos o hese a iables, we p oxy he owning cos s by he mon hly mo gage paymen s. 9 The NUTS (nomencla u e o e i o ial uni s o s a is ics) classi ica ion o Ge many is Bade -Wun e be g, Baye n, Be lin, B andenbu g, B emen, Hambu g, Hessen, Mecklenbu g-Vo pommem, Niede sachsen, No d hein- Wes alen, Rheinland-P alz, Saa lan, Sachsen, Sachsen-Anhal , Schleswig-Hols ein, and Thu ingen. The Spanish NUTS a e No h-Wes (Galicia, Can ab ia, As u ias), No h-Eas (Pais Vasco, Na a a, A agon), Cen e (Cas illa- Leon, Cas illa-La Mancha, Ex emadu a), Eas (Ca alunya, Valencia, Balea es), Sou h (Andalucia, Mu cia), Cana ias and Mad id. 17 and cu en ma i al s a us. In ou choice equa ion we also con ol o he ype o dwelling pu chased, and he eason o changing he dwelling i any. Inse able 4 he e 7. Es ima ion esul s In able 5 we epo he sample means o he explana o y a iables used in he ea nings equa ion (8) and in he enu e choice equa ion (7). The sample s a is ics e eals ha household head’s cha ac e is ics de e mining pe manen labou income (schooling, expe ience, enu e, weekly hou s wo ked, and he ype o con ac ) a e sys ema ically g ea e o owne s han o en e s. The e o e, i seams plausible o expec ha household head’s labou income p o iles will display di e en pa e ns be ween bo h enu es s a us. To es his assump ion, we es ima e he ea nings equa ion (8) sepa a ely o owne s and en e s. Resul s a e epo ed in able 6. All coe icien s a e signi ican a 1% le el and wi h he expec ed signs. We also ca y ou a Chow es o s uc u al change be ween bo h enu es. Wi h F-s a is ic o 127 o Ge many we s ongly ejec he null hypo hesis ha owne s and en e s income p o iles a e equal. In he case o Spain, he F-s a is ic is only 2.52, bu high enough o ejec he null hypo hesis a 5% signi icance le el. Hence, o bo h Spain and Ge many, we es ima e sepa a ed measu es o pe manen and ansi o y income, income unce ain y and skewness o owne s and en e s. Inse able 5 he e Inse able 6 he e 18 Table 7 and 8 con ain a desc ip i e analysis o he in e empo al income unce ain y and skewness measu es. We include bo h ypes o measu es, he ones calcula ed om labou income equa ion (8) and also om he s anda d o mula o he CV and skewness (he ea e K) o e yea ly labou income10. The summa y s a is ics e eal ha 2 ˆi ε σ , 3 ˆi ε κ posses enough a iabili y o look o e ec s in he choice equa ion (7). As expec ed, income unce ain y is ma kedly highe in Spain han in Ge many. Time income dis ibu ions also end o be subs an ially mo e posi i ely skewed in Spain. This esul is indica i e o he ac ha he labou ma ke pe o mance in bo h coun ies is e y di e en . We also ind ma ked in a-coun y di e ences be ween enu es, i.e. sys ema ic lesse income unce ain y and g ea e posi i e skewness o owne s han o en e s. In Ge many, income unce ain y is abou 35% g ea e o en e s han o owne s, whe eas o Spain i is abou 14% g ea e . Di e ences in income skewness be ween enu es a e e en mo e impo an , in Spain es ima ed skewness is six imes g ea e o owne s han o en e s. The same p opo ion in absolu e alue is jus 2.5 in Ge many. Compa isons ac oss popula ion g oups also beha e acco ding o expec a ions. As we p edic in ou heo e ical o mula (6), hese esul s sugges ha income unce ain y and skewness play a subs an ial ole in he house enu e choices in bo h coun ies. Inse able 7 he e Inse able 8 he e 10 The s anda d o mula o he coe icien o a ia ion is CV=σy/µy, and o skewness K=Σ(y-µy)3/Tσy 3, whe e µy is he ime a e age o yea ly income, and σy is he s anda d de ia ion. 19 In he second s ep, in e empo al measu es o income unce ain y and skewness a e used o es ima e he e ec o ea nings unce ain y and skewness on he disc e e choice be ween en ing and owning, we use a pooled c oss-sec ion p obi 11. Since ou da a se is a panel, in o de o ge unbiased es ima es we selec jus he las wa e he household has pa icipa ed, and he enu e s a us is de e mined in ha wa e. Resul s o he p obi es ima ion o he choice equa ion (7) a e epo ed in able 9. We ocus on he esul s in columns (1) and (2) picking up he e ec s o he income a iables based on he esiduals o he income equa ion (8). In bo h coun ies we ind a s ong nega i e ela ionship be ween labou income unce ain y and he p obabili y o homeowne ship. As we p edic in ou heo e ical o mula, he ela ionship wi h ea nings skewness is also s ongly signi ican and posi i e. In able 9 we also dis inguish be ween nega i e and posi i e shocks. The a iable called TI2 is a dummy a iable ha akes 1 i du ing he sample pe iod (1994-2000) he absolu e alue o he a e age o he nega i e shocks is g ea e han he a e age o he posi i e ones. This a iable exe s a signi ican nega i e e ec on he p obabili y o homeowne ship in bo h coun ies, whe eas he e ec o ansi o y income is posi i e. The a e age ma ginal e ec s epo ed in able 9 e eal ha a iables ela ed o ansi o y income (a e age ansi o y income, unce ain y and skewness) ha e a ma kedly s onge e ec in Spain han in Ge many, whe eas his is e e sed o he e ec o pe manen income. As a con ol we also epo he es ima es using he CV as unce ain y measu e and K as skewness, bo h a iables a e signi ican and wi h he expec ed signs. The emainde a iables in he choice equa ions also beha e acco ding o expec a ions. Employmen a iables a e e y impo an o he enu e s a us in bo h coun ies. Job mobili y, 11 The long un na u e o housing pu chases means ha du ing ou sample pe iod households do no expe ience mo e han one ansi ion om en ing o owning. The e o e we disca d he use o panel da a es ima ion, since he po en ial imp o emen s p o ided by his echnique do no apply o ou case. 20 p e ious unemploymen s a us and long un unemploymen (12 o mo e mon hs) end o educe signi ican ly he p obabili y o homeowne ship. The e ec o hese a iables is, once mo e, s onge in Spain han in Ge many. Public employees a e mo e like o own in Ge many, bu do no in Spain. Households possessing g ea e capi al income, and hose whe e he household head’s spouse is a wage ea ne also display a g ea e p opensi y o own. Use cos s a e e y signi ican and wi h he expec ed signs. Consis en wi h ou heo e ical o mula, he g ea e he owne -occupancy cos , he lowe he p obabili y o homeowne ship. The opposi e holds o he en ing cos s. Howe e , his e ec is mo e impo an ac oss he Ge man egions han in he Spanish ones. Conce ning he ype o dwelling, homeowne s show a s ong p e e ence o de ached and semi-de ached houses. 8. Conclusions and discussion In his pape , we expand he usual income unce ain y analysis (mean- a iance) o he housing enu e decisions by de i ing he e ec o he asymme y (skewness) in he income dis ibu ion on he p obabili y o homeowne ship. We use a simple heo e ical o mula ha allows de e mine he c ucial ole ha bo h a iance and skewness in income play on he housing enu e choices. In o de o es empi ically ou heo e ical esul s we pe o m educed o m equa ions es ima es o he p obabili y o homeowne ship in Ge many and Spain. Ou empi ical esul s con i m he p edic ions de i ed om he heo e ical o mula, signi ican nega i e e ec o isk and posi i e o skewness. This e idence sugges s ha households a e isk a e se and also exhibi “skewness a ec ion” when hey plan hei home enu e s a us. Mo eo e , ou esul s conce ning income isk a e consis en wi h p e ious empi ical e idence om he US. The al e na i e measu es o income isk and skewness based on he es ima ed esiduals o ea nings panel da a equa ions ha e also shown a good pe o mance. This con i ms ou 21 assump ions abou he deg ee o knowledge ha indi iduals ha e abou hei u u e ea nings. We also ind ha unemploymen his o y o he household head exe s a signi ican e ec on he p obabili y o homeowne ship. Household heads ha ha e been unemployed a leas once a e 1989 a e less likely o own. This e ec is augmen ed i hey ha e expe ienced long du a ion unemploymen (abo e 12 mon hs). The ac ha ou empi ical es ima ions hold in bo h coun ies endows ou heo e ical and empi ical esul s wi h a good consis ency. I is ema kable ha e en in a so lexible c edi ma ke as he Spanish, income unce ain y is s ill a ba ie o homeowne ship. This ci cums ance has signi ican implica ions o bo h public and p i a e ins i u ions. Recen ly he e exis he pe cep ion ha he s a e pension und sys em will expe ience se e e es ic ions in he long- un in Ge many and Spain. To be mo e speci ic, he o ecas abou u u e demog aphic e olu ion and on u u e social secu i y con ibu ions, p edic a c ash o he Spanish pension sys em abou he yea 2020. Undoub edly, homeowne ship is one o he bes hedging ools agains such a pessimis ic scena io. In his con ex , we claim ha mo e ac i e public housing wel a e policies, like o ins ance he p o ision o public mo gage downpaymen assis ance, a e necessa y in o de o p omo e homeowne ship among households acing highe a es o income unce ain y. In 1999 he Ge man go e nmen app o ed a new insol ency law ha elaxed he bo owe ’s deg ee o liabili y by allowing himsel o decla e in “p i a e bank up cy”. This si ua ion pe mi s o an o e ly indeb ed bo owe sol e he ou s anding inancial obliga ions by a cou se lemen in case i is no possible do i ou o he cou . I ep esen s a i s s ep o elaxing he ex emely conse a i e Ge man c edi ma ke ha can encou age o Ge man bo owe s o assume highe le els indeb edness. Undoub edly, i is a small doo open in o de o p omo e accessibili y o mo gage loans o hose wi h mo e ola ile income, bu maybe no 22 enough o each a mo e desi able le els o homeowne ship ha allow mos o he households o ace up o he expec ed u u e es ic ions in he Ge man pension sys em. The co olla y o ou esul s also applies o he exis ing p i a e mo gage paymen insu ance policies o e ed by c edi ins i u ions. P yce and Keoghan (2002) ind empi ical e idence o he UK ha mo gage bo owe s mos a isk a e less likely o unde ake such p i a e mo gage insu ance p oduc s. Acco ding o his, i could be ha c edi ins i u ions need o edesign hei mo gage p o ec ion ins umen s in o de o make i mo e a o dable and co e a wide ange o households’ inancial isks. The unde s anding o wha ex en he (in)accessibili y o a mo gage loan is d i en by c edi cons ain s o by households’ a e sion o he isk o a mo gage downpaymen is s ill a ele an ques ion o be answe ed. This exe cise would equi e sui able da a on households’ c edi quali y cons ain s (see e.g. Rosen hal 2002, o Ba ako a e al. 2003). I is plausible o expec a posi i e ela ionship be ween cons ain s in he accessibili y o mo gage loans and households’ income unce ain y in a conse a i e c edi ma ke like he Ge man one, howe e , bu no necessa ily in a lexible c edi ma ke like he Spanish one. Al hough we ind his could be a e y in e es ing ex ension o his wo k, i su passes he goals o his pape . Hence, u he esea ch on his issue is encou aged. 23 Re e ences Ba ako a, I.; R.W. Bos ic; P.S. Calem and S.M. Wach e (2003), Does c edi quali y ma e o homeowne ship?, Jou nal o Housing Economics 12, pp. 318-336. B adbu y, B. (1993): Male p e and ax wage inequali y: a six coun y compa ison, The Luxembou g Income S udy wo king pape 90. Luxembou g: CEPS INSTEAD. Chung, E.C. and D.R. Hau ing (2002), Housing choices and unce ain y: he impac o s ochas ic e en s, Jou nal o U ban Economics 52, 193-216. CIRIEC (2003), Housing s a is ics in he EU 2002, In e na ional Cen e o Resea ch and In o ma ion on he Public and Coope a i e Economy, Uni e si y o Liege, Belgium. DeSal o, J.S. and L.R. Eeckhoud (1982), The E ec o Unemploymen Risk on Consump ion Beha io , Zei sch i u Na ionalokonomie 42, 411-418. Diaz-Se ano, L.; J. Ha og and H.S. Nielsen (2003), Compensa ing wage di e en ials o schooling isk in Denma k, IZA discussion pape s #963, Bonn, Ge many. Fu, Y. (1995), Unce ain y, liquidi y, and housing choices, Regional Science and U ban Economics 25, 223-236. G een, G.; J. Code and P. Rysca age (1992), In e na ional Compa isons o Ea nings Inequali y o Men in he 1980s, Re iew o Income and Weal h 38, pp. 1-15. Ha og, J. and W. Vij e be g (2002), Do wages eally compensa e o isk a e sion and skewness a ec ion, IZA discussion pape s #426, Bonn, Ge many. Ha og; J.; E.J.S. Plug, L. Diaz-Se ano and A.J.C. Viei a, (2003), Risk compensa ion in wages: a eplica ion, Empi ical Economics 28, pp. 639-647. Hau in, D.R. and H.L. Gill (1987), E ec s o income a iabili y on he demand o owne - occupied housing, Jou nal o U ban Economics 22, 136-150. 24 Table 5: Sample means (1994-2000) Ge many Spain Ren e s Owne s Ren e s Owne s Household head demog aphics Female 0.352 0.219 0.154 0.088 (Age) 40.149 45.773 41.493 46.670 Yea s o schooling 12.630 13.265 10.610 10.337 (Ma ied) 0.584 0.851 0.687 0.870 Household head's spouse wo king (Wspouse) 0.490 0.623 0.319 0.343 Household size (Hsize) 2.630 3.200 3.266 3.736 Housdehold head employmen Labou expe ience 21.432 27.131 24.115 29.941 Fi m enu e 8.390 11.819 9.550 13.778 No ixed- e m con ac 0.553 0.569 0.356 0.433 Weekly hou s wo ked 41.070 43.218 43.717 45.049 Public wo ke (Public) 0.203 0.253 0.211 0.188 Household head unemploymen A leas once unemployed a e 1989 (Unemp89) 0.319 0.174 0.482 0.337 A leas once long unemployed a e 1989 (Longun89) 0.142 0.066 0.248 0.151 Reason o he las change o dwelling Job mo i es (Jobmobil) 0.045 0.007 0.058 0.010 House mo i es 0.184 0.151 0.139 0.076 Pe sonal mo i es (Pe mobil) 0.108 0.039 0.142 0.044 Type o dwelling De ached o semi-de ached house 0.171 0.659 0.146 0.338 (Fla ) 0.671 0.166 0.845 0.657 Occupancy cos s Owne -occupancy cos s 619 € 602 € 331 € 326 € Ren ing cos s 417 € 418 € 170 € 168 € Income Household head's ne yea ly labou income 19,456 € 25,553 € 14,338 € 15,533 € To al household ne income 27,847 € 36,648 € 17,225 € 20,689 € Household capi al income 417 € 854 € 286 € 589 € # o indi iduals 5,668 3,950 832 4,044 # o obse a ions 20,505 14,770 2,323 16,658 Sou ce: Own compu a ions based on he ECHP. No es: The names in pa en hesis e e o he a iables de ined in able 4. 31 Table 6: Panel da a andom e ec s es ima es o labou income equa ion (7) Ge many Spain Owne s Ren e s Pooled sample Owne s Ren e s Pooled sample Cons an 8.2875 (68.91) 7.7986 (81.57) 7.9459 (107.04) 12.9485 (103.46) 12.0887 (41.04) 12.8522 (111.69) Yea s o schooling 0.0399 (11.92) 0.0354 (12.93) 0.0375 (17.29) 0.0518 (21.22) 0.0618 (10.18) 0.0518 (22.47) Expe ience 0.0152 (3.90) 0.0236 (9.23) 0.0242 (11.55) 0.0253 (6.68) 0.0120 (1.93) 0.0241 (7.10) Expe ience squa ed -0.0003 (-4.95) -0.0005 (-9.33) -0.0005 (-11.78) -0.0004 (-7.09) -0.0003 (-1.95) -0.0004 (-7.48) Fi m enu e 0.0456 (12.00) 0.0773 (24.5) 0.0635 (26.21) 0.0578 (13.07) 0.0831 (7.59) 0.0593 (14.44) Fi m enu e squa ed -0.0013 (-7.75) -0.0025 (-18.18) -0.0020 (-18.53) -0.0018 (-9.68) -0.0024 (-5.09) -0.0018 (-10.46) log(weekly hou s) 0.3774 (14.05) 0.4270 (18.44) 0.4039 (23.05) 0.0805 (2.83) 0.2905 (4.04) 0.1050 (3.97) No ixed- e m con ac 0.0483 (5.44) 0.0502 (6.34) 0.0465 (7.90) 0.1394 (11.31) 0.0912 (2.65) 0.1311 (11.34) Female -0.5136 (-19.23) -0.2774 (-15.46) -0.3775 (-24.17) -0.3512 (-9.64) -0.2210 (-3.25) -0.3320 (-9.99) # o indi iduals 3,270 4,242 6,949 3,355 674 3,740 # o obse a ions 11,439 13,490 25,379 13,252 1,784 15,036 Sou ce: Own compu a ions based on he ECHP. 32 Table 7: Es ima es o household head’s labou income unce ain y by selec ed g oups Income unce ain y and skewness based on esiduals equa ion (7) Income unce ain y based on CV and K on yea ly income Ge many Spain Ge many Spain Owne s Ren e s Owne s Ren e s Owne s Ren e s Owne s Ren e s Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D. To al 0.188 0.253 0.255 0.402 0.336 0.330 0.384 0.402 0.222 0.239 0.261 0.270 0.290 0.258 0.364 0.311 Age g oup 25 o 35 0.172 0.192 0.298 0.481 0.342 0.348 0.476 0.535 0.261 0.268 0.293 0.285 0.292 0.287 0.333 0.314 35 o 45 0.204 0.265 0.254 0.372 0.338 0.316 0.295 0.238 0.210 0.216 0.239 0.254 0.291 0.240 0.351 0.322 45 o 55 0.189 0.327 0.210 0.287 0.354 0.354 0.398 0.391 0.178 0.232 0.208 0.239 0.294 0.255 0.372 0.277 55 o 65 0.151 0.219 0.196 0.375 0.214 0.147 0.263 0.266 0.203 0.237 0.254 0.249 0.185 0.133 0.417 0.324 Sec o o employmen P i a e 0.205 0.267 0.265 0.384 0.383 0.361 0.437 0.443 0.245 0.249 0.276 0.274 0.334 0.270 0.418 0.319 Public 0.144 0.209 0.223 0.407 0.197 0.147 0.232 0.184 0.153 0.196 0.203 0.249 0.148 0.142 0.162 0.167 Unemployed. a e 1989 No 0.172 0.245 0.214 0.346 0.294 0.295 0.319 0.412 0.186 0.212 0.209 0.249 0.241 0.238 0.252 0.258 Yes 0.239 0.273 0.329 0.480 0.392 0.366 0.462 0.379 0.327 0.281 0.349 0.283 0.349 0.270 0.456 0.322 Ma i al s a us No ma ied 0.166 0.187 0.264 0.352 0.334 0.339 0.413 0.510 0.198 0.203 0.280 0.283 0.307 0.287 0.399 0.355 Ma ied 0.193 0.266 0.248 0.433 0.336 0.330 0.366 0.322 0.227 0.246 0.248 0.260 0.287 0.253 0.341 0.277 Household ype Single 0.168 0.208 0.239 0.348 0.281 0.210 0.346 0.487 0.191 0.211 0.246 0.262 0.243 0.195 0.403 0.399 Single w. kids 0.122 0.067 0.299 0.372 0.368 0.289 0.304 0.195 0.183 0.222 0.346 0.325 0.291 0.231 0.341 0.284 Couple 0.177 0.226 0.251 0.346 0.365 0.456 0.408 0.500 0.163 0.179 0.266 0.274 0.311 0.326 0.293 0.256 Couple w. kids 0.196 0.272 0.258 0.466 0.331 0.309 0.418 0.364 0.244 0.257 0.250 0.262 0.290 0.253 0.372 0.293 Sou ce: Own compu a ions based on he ECHP. 33 Table 8: Es ima es o household head’s labou income unce ain y by selec ed g oups Income unce ain y and skewness based on esiduals equa ion (7) Income unce ain y based on CV and K on yea ly income Ge many Spain Ge many Spain Owne s Ren e s Owne s Ren e s Owne s Ren e s Owne s Ren e s Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D. To al 0.010 0.198 -0.004 0.260 0,144 0,850 0,022 0,600 -0.010 0.714 -0.091 0.639 0.139 0.704 0.026 0.580 Age g oup 25 o 35 -0.004 0.102 -0.004 0.288 0,125 0,890 0,091 0,602 -0.018 0.665 -0.069 0.610 0.135 0.731 0.035 0.495 35 o 45 0.022 0.288 -0.006 0.308 0,171 0,886 0,028 0,757 0.025 0.751 -0.069 0.657 0.110 0.660 0.023 0.671 45 o 55 0.008 0.048 -0.002 0.188 0,181 0,907 0,002 0,505 -0.072 0.715 -0.086 0.662 0.187 0.770 -0.007 0.571 55 o 65 0.026 0.147 -0.002 0.256 0,016 0,059 -0,080 0,521 -0.003 0.753 -0.189 0.686 0.250 0.732 0.136 0.586 Sec o o employmen P i a e 0.017 0.220 -0.002 0.268 0,175 0,948 0,025 0,657 -0.021 0.706 -0.098 0.643 0.145 0.719 0.013 0.590 Public -0.010 0.102 -0.012 0.224 0,044 0,353 0,006 0,028 0.023 0.737 -0.067 0.625 0.121 0.656 0.085 0.538 Unemployed a e 1989 No 0.012 0.204 -0.004 0.204 0,132 0,748 0,007 0,694 0.034 0.694 -0.059 0.637 0.239 0.711 0.074 0.618 Yes 0.006 0.178 -0.005 0.335 0,159 0,963 0,038 0,489 -0.139 0.758 -0.146 0.639 0.017 0.677 -0.016 0.543 Ma i al s a us No ma ied 0.043 0.354 -0.003 0.279 0,145 0,872 0,060 0,610 -0.013 0.680 -0.087 0.630 0.102 0.706 0.072 0.643 Ma ied 0.003 0.140 -0.005 0.245 0,144 0,848 0,001 0,593 -0.009 0.722 -0.094 0.646 0.146 0.704 0.002 0.545 Household ype Single 0.000 0.040 0.001 0.274 0,202 1,025 0,057 0,671 0.087 0.717 -0.093 0.635 0.021 0.771 0.045 0.676 Single (kids) 0.003 0.008 -0.012 0.302 0,003 0,172 0,149 0,790 0.041 0.656 -0.067 0.643 0.085 0.730 0.284 0.670 Couple 0.021 0.164 -0.003 0.265 0,060 0,635 -0,077 0,517 -0.039 0.696 -0.105 0.621 0.248 0.702 0.020 0.506 Couple (kids) 0.008 0.221 -0.006 0.252 0,161 0,897 0,036 0,570 -0.006 0.723 -0.083 0.651 0.152 0.700 -0.018 0.516 Sou ce: Own compu a ions based on he ECHP. 34 Table 9: P obi wi h obus s anda d e o es ima es o he housing enu e choice equa ion (6). Ge many Spain (1) (2) (3) (4) (1) (2) (3) (4) Cosn an -5.1233 (-6.97) -5.0171 (-6.86) -3.7191 (-6.83) -3.7048 (-6.66) -1.4037 (-1.44) -1.6173 (-1.56) 0.5580 (0.55) 0.4789 (0.46) H. Head labou income Income unce ain y -0.6955 (-3.76) -0.1162 -0.9487 (-4.31) -0.1565 -0.1815 (-1.65) -0.0284 -0.1981 (-1.75) -0.0309 -0.6775 (-2.99) -0.2634 -0.9163 (-3.35) -0.3571 -0.4526 (-2.43) -0.1795 -0.5161 (-2.76) -0.2047 Income skewness 0.2232 (3.04) 0.0368 0.0751 (1.87) 0.011 7 0.2238 (1.87) 0.0872 0.1906 (2.48) 0.0756 T ansi o y income 0.9384 (3.14) 0.156 7 1.4999 (2.91) 0.2474 0.8909 (1.72) 0.3464 1.2747 (2.10) 0.4968 Pe manen income/1000 0.0308 (8.05) 0.0051 0.0301 (7.79) 0.0050 0.0001 (1.77) 2.5·10-5 0.0001 (1.65) 2.3·10-5 A e age nega i e shocks g ea e han a e age posi i e shocks (TI2) -0.2065 (-3.07) -0.032 6 -0.2177 (-3.11) -0.0338 -0.5518 (-2.05) -0.2173 -0.6205 (-2.27) -0.2432 Yea ly income/1000 0.0061 (6.70) 0.0009 0.0060 (4.95) 0.0009 0.0001 (2.86) 4.0·10-5 0.0001 (2.74) 3.9·10-5 H. Head cha ac e is ics (Ma ied) 0.3313 (3.81) 0.0525 0.3352 (3.85) 0.0525 0.4114 (5.38) 0.0605 0.4117 (5.40) 0.0603 0.5238 (3.37) 0.2059 0.5314 (3.37) 0.2091 0.5658 (4.09) 0.222 6 0.5871 (3.66) 0.2307 (Age) 0.0542 (1.84) 0.0091 0.0506 (1.70) 0.0083 0.0704 (3.07) 0.0110 0.0698 (2.92) 0.0109 0.0801 (1.65) 0.0311 0.0730 (1.49) 0.0285 0.0179 (0.42) 0.0071 0.0192 (0.45) 0.0076 Age squa ed -0.0007 (-2.20) -0.0001 -0.0007 (-2.1) -0.0001 -0.0009* (-3.38) -0.0001 -0.0009 (-3.17) -0.0001 -0.0011 (-2.07) -0.0004 -0.0010 (-1.89) -0.0004 0.0179 (0.42) -0.0002 -0.0004 (-0.93) -0.0002 H. Head employmen Unemployed a e 1989 (Unemp89) -0.1863 (-2.65) -0.0299 -0.1682 (-2.37) -0.026 7 -0.2732 (-4.41) -0.0405 -0.2634 (-4.21) -0.0390 -0.0647 (-1.80) -0.0250 -0.0607 (-1.69) -0.023 7 -0.2671 (-2.26) -0.105 7 -0.2396 (-2.01) -0.0948 Long e m unemp. A e 1989 (Longun89) -0.2740 (-3.06) -0.040 6 -0.2862 (-3.16) -0.041 6 -0.2051 (-2.52) -0.0291 -0.2119 (-2.62) -0.0299 -0.2802 (-1.89) -0.1103 -0.2743 (-1.87) -0.125 6 -0.2734 (-1.84) -0.108 7 -0.2938 (-1.98) -0.1168 Public wo ke (Public) 0.1271 (1.86) 0.0221 0.1296 (1.88) 0.0223 0.1547 (2.46) 0.025 7 0.1538 (2.47) 0.0255 0.0726 (0.56) 0.0281 0.0749 (0.57) 0.0290 0.0992 (0.78) 0.0392 0.0903 (0.71) 0.0357 35 36 Table 9: Con inua ion Ge many Spain (1) (2) (3) (4) (1) (2) (3) (4) Household a iables Capi al ncome/1000 0.0185 (2.89) 0.0031 0.0181 (2.79) 0.0030 0.0189 (2.77) 0.0030 0.0187 (3.04) 0.0029 0.0010 (1.86) 0.0004 0.0009 (1.84) 0.0004 0.0011 (1.72) 0.0004 0.0011 (1.71) 0.0004 Household size (Hsize) 0.0504 (1.82) 0.0084 0.0492 (1.78) 0.0081 0.0599 (2.38) 0.0094 0.0597 (2.52) 0.0093 0.0247 (0.51) 0.009 6 0.0271 (0.54) 0.0105 0.0213 (0.51) 0.0084 0.0240 (0.57) 0.0095 H. Head's spouse wo king (Wspouse) 0.1322 (1.98) 0.0221 0.1379 (2.06) 0.022 7 0.1527 (2.61) 0.0240 0.1536 (2.61) 0.0093 0.3141 (2.74) 0.1208 0.3289 (2.83) 0.1268 0.2946 (2.81) 0.1159 0.3018 (2.87) 0.1187 Cos s Owne -occupancy cos s -0.0011 (-5.14) -0.0002 -0.0181 (-5.12) -0.0002 -0.0010 (-5.67) -0.0002 -0.0010 (-5.72) -0.0002 -0.0001 (-3.68) 9.5·10-5 -4.9·10-5 (-3.60) -1.9·10-5 -4.1·10-5 (-3.19) -1.6·10-5 -4.1·10-5 (-3.26) -1.6·10-5 Ren ing cos s 0.0034 (6.16) 0.000 6 0.0034 (6.18) 0.000 6 0.0031 (6.25) 0.0005 0.0031 (6.41) 0.0005 0.0001 (4.35) 2.9·10-5 0.0001 (4.26) 2.8·10-5 0.0001 (3.67) 2.4·10-5 0.0001 (3.67) 2.4·10-5 New dwelling is a la ( la ) -1.0844 (-18.18) -0.2211 -1.0791 (-17.79) -0.2179 -1.0658 (-19.74) -0.2082 -1.0664 (-20.17) -0.2080 -0.7419 (-5.60) -0.2663 -0.7483 (-5.52) -0.2694 -0.7298 (-6.01) -0.2731 -0.7309 (-5.98) -0.2734 Mo i e o las change o dwelling Job mo i es (Jobmobil) -0.4189 (-3.17) -0.054 6 -0.4280 (-3.20) -0.0548 -0.3993 (-3.15) -0.0489 -0.4069 (-3.31) -0.0494 -0.4391 (-2.12) -0.173 6 -0.4214 (-2.00) -0.1668 -0.4534 (-2.32) -0.178 7 -0.4500 (-2.33) -0.1774 Pe sonal mo i es (Pe mobil) 0.2605 (2.75) 0.0495 0.2263 (2.35) 0.0418 0.2467 (2.97) 0.0438 0.2502 (2.89) 0.0444 0.0956 (0.66) 0.0369 0.1087 (0.75) 0.0420 0.2239 (1.69) 0.0878 0.2352 (1.78) 0.0921 Sample size 3,630 4,749 668 774 Sou ce: Own compu a ions based on he ECHP. No es: Endogenous a iable: 1 i owne , 0 i en e . Columns (1) and (2): Unce ain y, skewness, ansi o y and pe manen labou income es ima ed om income equa ion (7), and measu ed as (8) o (11). Columns (3) and (4): Unce ain y and skewness measu ed as he CV and K. Z- alues in pa en hesis; elas ici ies in i alic on . The names in pa en hesis e e o he a iables de ined in able 4.