Public housing and intergenerational mobility in Singapore

In response to rising inequality and housing unaffordability around the world, governments have implemented various policies, including the provision of public housing. To what extent and how can public housing promote intergenerational upward mobility?

Singapore’s large-scale public housing programs offers an interesting case in point. The Housing & Development Board (HDB) and the Home Ownership Scheme were introduced in the early post-independence years to address housing shortages. Between 1960 and 1990, HDB completed nearly 667,575 housing units and was instrumental in achieving the country’s high homeownership rate of 87% in 1990 and stabilizing at around 90% by 2022.

Using housing transaction data, this study examines the impact of public housing on intergenerational mobility in housing consumption. While most studies examine the intergenerational transmission of socioeconomic status as measured by income or wealth, this study investigates intergenerational correlations in consumption – more specifically  housing consumption. Key findings are:

• Affordable public housing significantly enhances intergenerational mobility in housing consumption for poorer families : children born in disadvantaged families but whose parents benefit from affordable public housing are 11.2% more likely to surpass their parents’ housing status.
• A possible mechanism for this effect lies in an alleviation of budget constraints, which in turn facilitates greater investment in the human capital of children.

AUTHORS

• Sumit Agarwal, Department of Finance and Department of Real Estate, National University of Singapore
• Yi Fan, Department of Real Estate, National University of Singapore
• Wenlan Qian, Department of Finance and Department of Real Estate
• Tien Foo Sing,Department of Real Estate, National University of Singapore

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