Publication Type
Journal Article
Version
submittedVersion
Publication Date
4-2022
Abstract
This paper examines the impact of changes in house prices on when eligible individuals start receiving Social Security benefits. If house prices increase, financially constrained households may draw upon the additional home equity to finance expenses and delay receipt of Social Security in order to have increased lifetime monthly benefits. To address concerns that house price changes are correlated with unobserved local demand shocks, we use a control function approach and employ two different instrumental variables. We find that individuals delay Social Security claiming when house prices increase during the housing boom. The probability of claiming within two years after becoming eligible decreases by 8.67-8.81 percent for every 10 percent increase in house prices. We also find that the total home loan amount increases in response to the price appreciation, indicating households are drawing upon their home equity to finance consumption and delay receiving Social Security.
Keywords
Social Security, home equity, housing wealth shock, land supply, elasticity
Discipline
Economics | Public Economics | Real Estate
Research Areas
Applied Microeconomics
Publication
Economic Inquiry
Volume
60
Issue
2
First Page
620
Last Page
644
ISSN
0095-2583
Identifier
10.1111/ecin.13058
Publisher
Wiley
Citation
HUANG, Naqun; JING, Li; and ROSS, Amanda.
Housing wealth shocks, home equity withdrawal, and the claiming of social security retirement benefits. (2022). Economic Inquiry. 60, (2), 620-644.
Available at: https://ink.library.smu.edu.sg/soe_research/2543
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1111/ecin.13058