Differentiated Housing Demand by Birth Cohort

초록

The conventional models of housing demand assume that households follow an age-specific demand schedule during their lifecycle. However, housing demand depends not only on current socio-economic contexts characterized by age but also on past socio-economic experiences and physical properties differentially formed by birth cohort. This study proposes a methodology to estimate aggregate housing demand that reflects inter-generational differences of housing consumption. Using multi-year Korean Census data, a methodology was developed to determine inter-generational differences of housing demand on the basis of a modified Mankiw and Weil (M-W) model. In the model, birth cohort rather than age group of household members are used as exploratory variables. The estimates are then applied to the process to estimate future housing demand. The results reveal that the post baby-boom generation is reducing their housing consumption compared to previous generations, and that the aggregate housing demand is smaller than what was estimated using the M-W model.