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Title: The Effect of the G.I. Bill on Homeownership of World War II Veterans
Citation Type: Miscellaneous
Publication Year: 2008
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Abstract: This paper estimates the effects of the G.I. Bill on homeownership of veterans returning from WWII. The estimation strategy focuses on between-cohort differences in military service. I take advantage of the sharp decline in service among men who were born between 1927 and 1929. In particular, when the Selective Service Act prohibited voluntary enlistment in the last months of WWII, the cohorts of men born between January 1927 and March 31, 1929 were most severely affected. As the war progressed, birth date chronology became the primary determinant of the probability of military service, and those who were born after the second quarter of 1929 were no longer eligible to serve in WWII. I use birth quarter cohort dummies as an instrument for veteran status to eliminate selection bias. I find that the G.I. Bill had a significant impact on increasing homeownership of veterans compared to otherwise similar non-veterans among whites, while its effects on African Americans were negligible. The G.I. Bill, thus, contributed to widening the racial gap in homeownership in the post-war period. However, the advantage in homeownership that white veterans enjoyed vis--vis non-veterans in 1960 disappeared by 1980 when the cohorts in question have turned 50, while black veterans improved their homeownership status compared to nonveterans tremendously. VA home loan guarantees relax liquidity constraints of veterans; the beneficial effects of the G.I. Bill seem to allow potential homeowners to purchase a home at an early stage in life. For African-American veterans, however, VA home loan guarantees enabled them to become homeowners, which would otherwise have been difficult. JEL Classification Codes: R21, N32 Keywords: G.I. Bill, homeownership, home value, regression discontinuity design
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Authors: Yamashita, Takashi
Publisher: Reed College
Data Collections: IPUMS USA
Topics: Aging and Retirement, Housing and Segregation, Labor Force and Occupational Structure
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