We use a simple two-sector, life-cycle economy with bequests to explain the increasing wealth to income ratio, housing wealth and wealth inequality that have been observed in several countries over the long-run as a consequence of a rising labor efficiency in manufacturing (housing cost disease). When consumption inequality across households is sufficiently large, the housing cost disease has adverse effects on a measure of social welfare based on an egalitarian principle: the higher the housing's value appreciation, the lower the welfare benefit of a rising labor efficiency in manufacturing.

The Housing Cost Disease / Borri, Nicola; Reichlin, Pietro. - DP10756:(2015).

The Housing Cost Disease

BORRI, NICOLA;REICHLIN, PIETRO
2015

Abstract

We use a simple two-sector, life-cycle economy with bequests to explain the increasing wealth to income ratio, housing wealth and wealth inequality that have been observed in several countries over the long-run as a consequence of a rising labor efficiency in manufacturing (housing cost disease). When consumption inequality across households is sufficiently large, the housing cost disease has adverse effects on a measure of social welfare based on an egalitarian principle: the higher the housing's value appreciation, the lower the welfare benefit of a rising labor efficiency in manufacturing.
2015
Capital, Housing, Productivity, Wealth, Wealth Inequality
The Housing Cost Disease / Borri, Nicola; Reichlin, Pietro. - DP10756:(2015).
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11385/155826
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