Cross-country Differences in Homeownership: A Cultural Phenomenon?

Abstract

Cross-country differences in homeownership rates are large and persistent over time, with homeownership rates ranging from 40% in Switzerland to 80% in Spain. This paper investigates whether culture is a driving factor of the homeownership decision, and could thus explain part of the cross-country differences in homeownership rates. To isolate the effect of cultural references regarding homeownership from the impact of institutions and economic factors, we investigate the homeownership decisions of second-generation immigrants in the United States between 1994 and 2017. Our findings indicate that cultural preferences for homeownership are persistent, transmitted between generations, and substantially influence the rent-versus-buy decision.