Housing Price and the Level and Timing of Fertility in Korea: An Empirical Analysis of 16 Cities and Provinces

Abstract

Using 16 regional panel data in Korea over the period of 2009-2013, this paper empirically examines the impact of housing price (measured by owner housing price and rental housing price) on the level (i.e., total fertility rate: TFR) and timing (i.e., women’s mean age at first birth: AFB) of fertility. The empirical results show that housing price has negative and statistically significant impacts on TFR, regardless of the selections of model and methodology. This implies that people tend to postpone or forgo marriage and/or birth as the housing prices increase. In addition, we found that housing price has a statistically significant positive impact on AFB. However, the estimated coefficients of housing price, when considering the endogeneity, provide little evidence on AFB, meaning that data on AFB are plausible to the path dependent. Therefore, empirical results suggest that a higher housing price can be an important factor for fertility decline and postponement of having children. This suggests that the housing policy targeted for the young may affect the fertility rate as well.