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

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1111/ecin.13058

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