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Title: Real Rents and Household Formation: The Effect of the Tax Reform Act of 1986
Resulting in 1 citation.
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Haurin, Donald R. Hendershott, Patric H. Kim, Dongwook |
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Real Rents and Household Formation: The Effect of the Tax Reform Act of 1986 Working Paper, Department of Economics, The Ohio State University, Columbus OH, 1990 Cohort(s): NLSY79 Publisher: Department of Economics, The Ohio State University Keyword(s): Assets; Family Income; Household Models; Household Structure; Income; Marital Status; Residence; Taxes; Wages Permission to reprint the abstract has not been received from the publisher. Although the economic literature has analyzed some components of the headship decision, study of household formation has been primarily in the realm of demography. The authors begin this analysis with a pure demographic model and expand it to include additional determinants of the decision to remain with parents or not, to marry or not, and to live with a group or separately. The results, based on a sample of 2355 youth in their twenties from the NLSY, indicate that (1) rental costs, wealth, and the potential wage that a youth could earn are important variables in explaining the outcomes of these choices and (2) inclusion of the economic variables significantly changes the estimated impacts of the demographic variables. One insight that the expanded economic model allows is the prediction that some public policies will affect headship rates of youth. This prediction is of interest because choices of living arrangements often have implications for demands upon public services and housing. Using as an example the 1986 Tax Reform Act, the authors focus on a single outcome: the expectation of higher rental costs. If rentals rise by 20 percent, as predicted by some tax analysts, there will be an estimated half million reduction in the number of 1986 households formed by youth ages 21 to 29. |
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Bibliography Citation
Haurin, Donald R., Patric H. Hendershott and Dongwook Kim. "Real Rents and Household Formation: The Effect of the Tax Reform Act of 1986." Working Paper, Department of Economics, The Ohio State University, Columbus OH, 1990. |