Shinichiro Iwata University of Toyama Japan Michio Naoi

Shinichiro Iwata (University of Toyama, Japan) Michio Naoi (Keio University, Japan) The asymmetric housing wealth effect on childbirth 1

The economics of fertility � 2

Lovenheim and Mumford（2013） �US individual-level data (the Panel Study of Income Dynamics) from 1990 -2007. Prob (Childbirth) Homeowners Renters Changes in self-reported home values (four years, $100, 000 ) Changes in the MSA-level housing price (four years, $100, 000 ) Negative and insignificant 3

Dettling and Kearney（2013） �MSA-level fertility rates on MSA-level housing prices during the 1997 -2006 Fertility rates Homeowners Renters House price index (1 year lag, $100, 00) 4

Housing bust and a symmetric negative impact �Lovenheim and Mumford（2013） 17% of the subsample: price declines Response is not symmetric � Dettling and Kearney (2013) Housing bust period (1990 -96) The same tendency �More work is needed 5

What we do in this paper � 6

The theory of childbirth and housing wealth 1 � Depends on W 7

The theory of childbirth and housing wealth 2 � 8

The value function Subjective value W 9

Optimal probability to have a kid B* W 10

Asymmetric Hypothesis • Above the reference point: weak positive impact • Below the reference point: strong positive impact 11

Data �Keio Household Panel Survey Large-scale panel data started in 2004 Initial sample of approximately 4, 000 households aged 20 -69 �Sample 2004 -2011 (8 waves) Childbirth behavior: Wives aged less than 50 Homeowners N = 3125 12

Variable: childbirth 1 �Query about a change in household member Whether you have a baby in the last 12 months Childbirth dummy (B): Respondents have a baby in the last 12 months 13

Variable: childbirth 2 �Cross-check 14

Variable: housing wealth 1 � 15

Variable: housing wealth 2 �Reference point The self-reported value in the previous year (W*t– 1 ) 16

Variables: Other �Characteristics of married women Age, the level of completed education, employment status before birth, duration of marriage, Number of existing children, �Characteristics of household Annual income, Husband’s labor income, residential location 17

Empirical model � 18

Empirical result 1 � Benchmark Symmetric response House values have Childbirth Coeff. Duration of marriage -0. 1090* # of existing children -0. 6718** positive impact on birth Age Consistent with previous literature in Household income US Change house value from the reference 1. 3119** -2. 1468** 1. 0729** 0. 0932+ 3, 125 19

Empirical result 2 � Renter Symmetric response House values have negative (but insignificant) impact on birth Consistent with previous literature in US Childbirth Coeff. Duration of marriage -0. 1958** # of existing children -0. 3354 Age 0. 4368 -0. 7929+ Household income Change average house value from the average reference 0. 9272 -0. 4682 1, 355 20

Empirical result 3 � Childbirth Change house value from the reference [1] [2] [3] 0. 0454 0. 4196* 2. 92* 0. 0606 0. 4372* 2. 69+ 0. 0446 0. 4540 * 1. 23 3, 125 2, 560 3, 125 21

Empirical result 4 � Childbirth Change house value from the reference [1] [2] [3] 0. 0454 0. 4196* 2. 92* 0. 0606 0. 4372* 2. 69+ 0. 0446 0. 4540 * 1. 23 3, 125 2, 560 3, 125 22

Empirical result 4 � Childbirth Change house value from the reference [1] [2] [3] 0. 0454 0. 4196* 2. 92* 0. 0606 0. 4372* 2. 69+ 0. 0446 0. 4540 * 1. 23 3, 125 2, 560 3, 125 23

Implication �Japan has experienced two decades of house price declines. This may have a substantially negative effect on fertility decisions of households in Japan. �Even if house wealth turn to increase, fertility rates of homeowners may not dramatically recover. 24