Abstract
Research shows that extrahousehold kin economic resources contribute to the racial gap in transitions into homeownership, but the extent to which these resources matter for racial disparities in exits from homeownership is less understood. Using longitudinal data from the Panel Study of Income Dynamics, 1984–2017, we examine the role of extrahousehold kin wealth and poverty in shaping racial inequalities in the risk of exiting homeownership. Our nonlinear decomposition results indicate that racial differences in family network resources explain a nontrivial portion of the racial gap in homeownership exit, but there is little evidence that the effects of kin resources on exit are moderated by race. Among both Black and White owners, having wealthier noncoresident kin does not lessen the negative impacts of adverse economic or health shocks on the probability of losing homeownership. Our findings have implications for policies and programs designed to buttress the ability of minority households, especially those in financial distress, to sustain the wealth-building state of homeownership.
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Data Availability
The data sets generated and/or analyzed during the study are available from the corresponding author on reasonable request.
Notes
Accordingly, this person-interval approach allows respondents to contribute several observations to the analysis. For example, homeowners who return to renting between the 2001–2003 interval are not included in the 2003–2005 exit analysis, yet these householders are eligible for the 2005–2007 interval if they transitioned back to owning in 2005.
Reflecting the initial design of the PSID, members of other racial/ethnic groups are not represented in sufficient numbers during this timeframe to support analysis.
Due to small sample sizes, we combine householders’ aunts and uncles, nieces and nephews, great aunts and uncles, and great nieces and nephews.
Although the FIMS tool facilitates an extensive account of PSID householders’ kin networks, relatives not sampled by the PSID are not included in the study, and thus some extrahousehold kin networks are incomplete. Accordingly, we assume that the magnitude of economic resources does not significantly differ between nonsampled and sampled households or within racial groups. This assumption informs our measurement decision to use average levels of wealth and poverty across noncoresident kin rather than absolute levels. In light of this limitation, we consider our estimates of extrahousehold kin resources on homeownership exits to be conservative.
Supplemental analyses on the 1999–2017 period yielded results that are substantively similar to those from the 1984–2017 period.
Two alternative transformations of own-household wealth—a categorical measure (quartiles) and inverse hyperbolic sine (IHS) transformed measure—performed similarly to our logged version.
Supplemental models assessed but did not detect nonlinear effects across extrahousehold kin wealth distributions with several alternative transformations, including linear splines with knots at the 25th, 50th, and 75th percentiles, a categorical measure of quartiles, and quadratic terms.
To examine whether average levels of wealth and poverty mask variation across householders’ kin networks, we ran models using counts of and dichotomous measures of wealthy and poor kin. Results indicated that the effects of the number (or presence) of wealthy and poor kin are consistent with those using average levels of wealth and poverty. Results using the maximum extrahousehold wealth across the kin network were also substantively similar to those presented here. These supplemental tests are available from the authors.
Another trigger event studied in housing transition research is marital instability (e.g., divorce, spousal death). In our interval-based approach, couples who experience marital instability have a higher exit rate because someone generally must move out. Supplemental models including marital instability indicated predicted exit probabilities for Black and White owners of .31 and .32, respectively—six times higher than other trigger events. Additional results from models removing homeowners who have experienced negative marital transitions were substantively consistent with those presented here (available upon request). Thus, we focus on adverse economic/health transitions associated with losing homeownership rather than household composition changes that are likely endogenous to transitioning to periodic rentership.
To alleviate the risk of reverse causality, we use PSID monthly employment information, in conjunction with the month of migration, to flag only those householders or spouses/partners who lost their job before a presumed exit occurred during the interval.
We acknowledge there could be other nonnegative explanations for moving associated with exiting ownership. The PSID asks movers whether the reasons for the move are consumptive (job-related, housing-related) or involuntary (eviction, health issues). We checked our sample of homeowners against this question and found that Black owners are more likely to have reported job-related reasons for moving, but a higher share of White owners reported involuntary reasons.
We recognize that beyond Fairlie’s (2005) nonlinear decomposition technique, some stratification scholars have used other approaches to decompose effects into primary and secondary effects, which are akin to the explained and unexplained parts of the Fairlie decomposition (e.g., Erikson et al. 2005; Karlson and Anders 2011). These methods are especially useful for path models interested in formally testing theoretically informed mediators in nested models. We rely on the Fairlie method because of its descriptive, rather than causal, application to decomposing relative explanations of the racial gap in ownership exit and its common usage in group disparities research across a range of demographic phenomena (e.g., Hayford 2013; Kaida 2015; Su and Addo 2018).
To test significant differences in AMEs between Black and White homeowners, we follow Mize et al. (2019).
Interaction terms between race and kin resources in the pooled model are also statistically nonsignificant.
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Acknowledgments
The authors are grateful for the valuable advice and feedback from Jason Houle, Fabian Pfeffer, and Jessica Su during various stages of this research. An earlier version of this article was presented at the 2019 annual meeting of the Population Association of America in Austin, TX.
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All authors contributed to the study conception and design. Gregory Sharp performed all data management and statistical analysis tasks and wrote all portions of the manuscript. Ellen Whitehead wrote some portions of the manuscript and reviewed and edited all portions of the manuscript. Matthew Hall reviewed and edited all portions of the manuscript.
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Sharp, G., Whitehead, E. & Hall, M. Tapped Out? Racial Disparities in Extrahousehold Kin Resources and the Loss of Homeownership. Demography 57, 1903–1928 (2020). https://doi.org/10.1007/s13524-020-00913-4
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DOI: https://doi.org/10.1007/s13524-020-00913-4