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- W1590896738 abstract "Cynthia Bansak St. Lawrence University Martha A. Starr American University March 2011 Abstract In considering whether asset-price bubbles should be offset through policy, an important issue is who pays the price when the bubble bursts. A bust that reduces the wealth of well-off households only may have small welfare costs, but costs may be sizable if broad swaths of households are affected. This paper uses micro data from the American Community Survey to examine how the recent housing bust affected households‟ employment, homeownership, home values, and housing costs. To separate dynamics of the housing bust from those of the aggregate downturn, we differentiate between metropolitan areas that did and did not experience bubbles. We find that, for most measures, deteriorations in well-being were more severe in bubble metros than elsewhere, and for several measures, differential effects on less-educated households were also more severe. This underscores the importance of keeping housing markets from overheating, as burdens of adjustment fall differentially on people not well prepared to bear them. JEL codes: R21, D31, D12, E32 ____________________________________________________________________ Please address correspondence to: Martha A. Starr, American University, Department of Economics, 4400 Massachusetts Ave. NW, Washington, DC 20016-8029. Phone: 202-885-3747. Email: mstarr@american.edu. We are grateful to Ren Farley, Lisa Neidert, and Al Anderson for their expert guidance in the use of the American Community Survey data, and to session participants at the 2010 ASSA meetings and 2011 EEA meetings for valuable comments on earlier versions of this work." @default.
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- W1590896738 date "2011-03-01" @default.
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- W1590896738 title "Distributional costs of the housing-price bust" @default.
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