Differential Effects of Homeownership on Children from Higher- and Lower-Income Families

A growing body of evidence indicates that children benefit from parental homeownership. This article examines whether children from lower-income and higher-income families benefit equally from homeownership. If systematic differences exist, previous research that assumed equal benefits across the income spectrum could have produced erroneous estimates. For children growing up in families with incomes less than 150 percent of the federal poverty line, homeownership is found to raise educational attainment, earnings, and welfare independence in young adulthood. These positive results do not extend to the long-term outcomes of children in families with incomes more than 150 percent of the poverty line, however. Results are robust across models that test four different instrumental variables for homeownership. This increases confidence that homeownership effects are not attributable to unobserved characteristics of homeowners, but rather indicate causal effects.