Abstract
The aim of this study is to examine the link between house prices and marriage in Spain. We consider data from 50 Spanish provinces (NUTS III regions) and from local civil registries in 282 cities with populations greater than 25,000 inhabitants. The regional data cover the 1995–2018 period, whereas the local sample includes information from 2005 to 2018. The marriage rate is defined as the annual absolute number of marriages per thousand inhabitants in each region or city. We used data on Spain because the Spanish housing market experienced a strong rise in house prices until 2006, when the housing bubble ended and prices dramatically decreased. By using different econometric techniques (panel data models with fixed effects and dynamic panel data models), our results reveal that there is a significant negative relationship between house prices and the marriage rate at both the regional and local levels. Overall, this study highlights the important consequences of rising house prices on family formations. Therefore, public authorities should try to reduce fluctuations in house prices and to facilitate access to home ownership for young couples.
Highlights
One strong concern in Western Europe in recent decades has been a slowdown in family formation and the subsequent changes in fertility rates
The aim of this study is to examine the link between house prices and marriage in Spain
This time, we only focused on the difference generalized method of moments (GMM) estimations, because the OLS results were not conclusive
Summary
One strong concern in Western Europe in recent decades has been a slowdown in family formation and the subsequent changes in fertility rates. In addition to reproduction, marital status affects decisions regarding labor supply, consumption, reproduction, and other important matters [2]; the determinants of marriage have strong policy implications It is well established in the literature that the creation of a family and its timing may crucially depend on certain economic variables. Gary Becker [3] established the foundations of the economics of the family decades ago, with a novel theoretical framework based on an economic approach His theory was based on utility maximization, in that individuals choose to marry when the expected lifetime utility derived from marriage exceeds the expected utility from remaining single. From this perspective, changes (especially unexpected changes) in some economic factors, such as unemployment, labor supply, price stability and consumption, can affect family formation. An alternative viewpoint considers marriage as insurance against poor economic conditions [4,5]; economic crises, unemployment, or a decrease in house prices could result in an increase in marriages
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