An Empirical Study on the Impact of Tenure Choice on Saving for Chinese Households
Author
Start Page / End Page
Volume
Issue Number
Year
Publication
Chu-Chia Lin, Po-Sheng Lai
275 / 294
21
2
2018
International Real Estate Review
Abstract
The purpose of this paper is to estimate the impact of tenure choice on saving for Chinese households. Since housing expenditure usually accounts for a large portion of household spending, households need to consider how much they have in order to save for future housing spending when they decide on their daily expenditures, including food, clothing, transportation, education, leisure, and so on and so forth. We estimate the tenure choice behavior of Chinese households by first, applying a data set from the China Household Finance Survey and separating households into three types of tenure choice, namely, renters, owner-occupied with a mortgage, and owner-occupied without a mortgage. Then, we estimate the actual impact of tenure choice on saving by applying the Heckman two-stage model. Our estimations show two important results. First, the coefficients of the inverse Mills ratio are significant which implies that a two-stage estimation model is appropriate. Secondly, the estimated coefficients for the factors that affect saving behavior under the two-stage model are significantly different from those under a conventional model. The result shows that, without considering tenure choice, the conventional method of estimation for factors that affect saving behavior will be biased.
Keywords
Tenure Choice, Saving Behavior, Heckman Two-Stage Model