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Wealth Effects of Early Middle-aged, Late Middle-aged and Elderly Households

LEE Hyunjeong 1,  Yu Jongsun 2

1경희대학교
2경희대학교 주거환경학과

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ABSTRACT

This study is designed to find out the effect of housing wealth upon consumer spending. Using the 2012 Korean Labor & Income Panel Study(KLIPS), this study analyzes 645 home-owning households in the Seoul Metropolitan Area which are divided into three different age groups ranging from early middle-aged, late middle-aged to elderly households. The results show housing wealth effects in statistical significance, and they reveal that the consumption elasticity from housing wealth is estimated to be much higher than ones from financial asset and non-housing real estate asset. As the age of householders increases, the elasticity of housing wealth decreases, and financial wealth has a stronger propensity to consume among elderly households than any other age groups. Also, the empirical analysis indicates that household liability seriously undermines households’ marginal propensity to consume out of housing wealth gains. In particular, early middle-aged households are more likely to spend a substantial portion of realized home equity gains than are the other two age groups if the debt-wealth ratio is reduced. Further, late middle-aged households are likely to actively tap into their housing windfalls. For early middle-aged and elderly households, net household wealth and rental income are statistically proved to have an significant effect on household consumption. The findings imply that the effect of housing wealth on household consumption can be clearly stimulated by curtailing household liabilities and by increasing household income and housing value.

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* References for papers published after 2023 are currently being built.

This paper was written with support from the National Research Foundation of Korea.
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