Do social networks promote homeownership?

Abstract

We study the impact of social networks on housing tenure choice in Indonesia. Since the homeownership decision is often associated with a change of location—and social networks in large part being tied to the physical location—studying the impact of social networks on tenure choice in isolation of the mobility decision may not be meaningful. Addressing the issue of potential endogeneity of social networks in the joint mobility–tenure choice decision, we estimate the effect of social networks on homeownership. We find the effect to be positive.