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INVESTIGATION OF VARIOUS FACTORS BEHIND
NON-DEACCUMMULATION OF HOUSING AND WEALTH WITH AGING
by
Asiye Aydilek
A Dissertation Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(ECONOMICS)
August 2009
Copyright 2009 Asiye Aydilek
Object Description
| Title | Investigation of various factors behind non-deaccummulation of housing and wealth with aging |
| Author | Aydilek, Asiye |
| Author email | aaydilek@usc.edu; asiye_koc@hotmail.com |
| Degree | Doctor of Philosophy |
| Document type | Dissertation |
| Degree program | Economics |
| School | College of Letters, Arts and Sciences |
| Date defended/completed | 2009-04-16 |
| Date submitted | 2009 |
| Restricted until | Unrestricted |
| Date published | 2009-07-12 |
| Advisor (committee chair) | Imrohoroglu, Ayse |
| Advisor (committee member) |
Quadrini, Vincenzo Dekle, Robert Tuzel, Selale |
| Abstract | In this paper, we explore whether a standard life cycle model in which households purchase nondurable consumption and housing and face idiosyncratic income and mortality risk as well as endogenous borrowing constraints, enriched with several new components, like habit formation in housing, increasing leisure with retirement, stochastic health shocks, can account for key patterns of consumption, housing and asset holdings over the life cycle. First, consumption expenditures on non-housing consumption are hump-shaped. Second, the housing profile first increases monotonically and then flattens out.; Third, the household accumulates wealth until age 70s and then does not liquidate his wealth much until he dies. Fourth, as shown by Aguiar and Hurst, neither the quality nor the quantity of food intake deteriorates with retirement status, although food expenditures decrease dramatically. We develop a life-cycle model that explicitly incorporates the dual feature of housing as both a consumption good and an investment asset. Our analysis indicates that transaction costs in house trading are essential to explain the home ownership patterns in the data. The increase in leisure due to retirement helps to explain the non-deaccumulation in housing and wealth for the elderly people. Moreover, the composite of consumption goods bought from the market and consumption goods prepared at home, does not decrease with retirement. Stochastic health shocks and medical costs also help to explain the nondeaccumulation of housing and wealth for the elderly. Habit formation in housing brings some of the statistics closer to the data. The household acquires less housing and more consumption at each age with habit formation. Habit formation helps to explain the flat housing profile for the elderly but it still does not explain the wealth profile of the elderly. We thus conclude that a standard model with transaction costs in house trading should be enhanced with key features like leisure and health shocks to explain the key patterns in the data. |
| Keyword | housing; health; wealth; habit; leisure |
| Language | English |
| Part of collection | University of Southern California dissertations and theses |
| Publisher (of the original version) | University of Southern California |
| Place of publication (of the original version) | Los Angeles, California |
| Publisher (of the digital version) | University of Southern California. Libraries |
| Provenance | Electronically uploaded by the author |
| Type | texts |
| Legacy record ID | usctheses-m2351 |
| Rights | Aydilek, Asiye |
| Repository name | Libraries, University of Southern California |
| Repository address | Los Angeles, California |
| Repository email | http://www.usc.edu/isd/libraries/services/ask_a_librarian/email/ |
| Filename | etd-Aydilek-2994 |
| Archival file | uscthesesreloadpub_Volume17/etd-Aydilek-2994.pdf |
Description
| Title | Page 1 |
| Full text | INVESTIGATION OF VARIOUS FACTORS BEHIND NON-DEACCUMMULATION OF HOUSING AND WEALTH WITH AGING by Asiye Aydilek A Dissertation Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PHILOSOPHY (ECONOMICS) August 2009 Copyright 2009 Asiye Aydilek |
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