The housing channel of intergenerational wealth persistence

Abstract

We use Norwegian micro data and a life-cycle model with housing to study how wealth transmits across generations through the housing market. A mediation analysis reveals large housing gaps based on parental wealth. A shift-share IV-analysis using stock mar ket returns supports a causal interpretation. Using the timing of intra-family deaths, we further show that housing outcomes when young are important determinants of later-in-life wealth. Nearly 15% of intergenerational wealth persistence occurs through the housing market, making housing equally important as the combined impact of parental wealth via a broad range of offspring characteristics, including income and education.