The Effect of Housing Wealth on College Choice: Evidence from the Housing Boom

Wealth Inequality and Accumulation

“…Alternatively, macro-economic fluctuations can serve as exogenous shocks facilitating identification of wealth effects on various outcomes. For example, Lovenheim and Reynolds (2013) exploit exogenous variation across Metropolitan Statistical Areas (MSAs) in trends in housing values to estimate the effects of parental home appreciation on offspring college attendance, choice, and completion. Still, these methods are not a panacea.…”

“…Parental wealth is associated with greater offspring educational and cognitive achievement (Conley 1999, 2001b; Doren & Grodsky 2016, Friedline et al 2015, Jez 2014, Orr 2003, Pfeffer 2011, Yeung & Conley 2008) and labor market outcomes, such as occupational attainment and work hours (Conley 1999, Pfeffer 2011). Parental wealth and home value appreciation are positively associated with college enrollment, institutional quality, and bachelor’s degree completion (Conley 2001b, Doren & Grodsky 2016, Jez 2014, Lovenheim & Reynolds 2013), as well as transitions to homeownership (Charles & Hurst 2002, Spilerman & Wolff 2012). …”

Mismatch in Human Capital Accumulation

“…For example, Belley and Lochner () find that parent's income has a larger effect on college attendance in the NLSY97 compared to the NLSY79 data. Further, Lovenheim and Reynolds () argue that housing wealth impacts the quality of school choice.…”

The Impact of Housing Markets on Consumer Debt: Credit Report Evidence from 1999 to 2012

“…In light of the ongoing growth of the student loan market, consumer substitution between home equity and student loans has received some attention . Lovenheim () and Lovenheim and Reynolds (), taken together, demonstrate that home equity increases during the boom were associated with greater likelihood of college attendance, greater college quality, lower rates of work while in college, and higher rates of college completion, suggesting that families did rely on home equity increases from 2002 to 2006 to finance higher education. These papers register concerns regarding the potential impact of the downturn in the housing market on the prevalence and quality of higher education, and we attempt to address these concerns from the perspective of home equity borrowing…”

“…Influential studies of consumers’ response to the unusual patterns in the housing market in recent years, including Charles, Hurst, and Notowidigdo (2013), Mian and Sufi (, ), Lovenheim (), Lovenheim and Reynolds (), and Lovenheim and Mumford (2013), for example, use data from 2007 and before. Dynan (), Mian, Rao, and Sufi (), and Mian and Sufi () are examples of related studies that emphasize recession‐era consumer behavior.…”