Household Composition and Housing Expenditures in Rental-Occupied and Owner-Occupied Markets


  • Author's Note: Aydogan Ulker, PhD in economics from the University of Texas at Austin, is a research fellow in the Economics Program of the Research School of Social Sciences at the Australian National University. His main research interests are public economics, labor economics, and health economics. His work has focused on important public policy issues, such as aging and consumption inequality, household structure and consumption insurance of the elderly, and the effects of marital history on wealth accumulation and portfolio allocation.


This article examines the relationship between household compositions and housing expenditures in rental-occupied and owner-occupied markets. The author finds that renters allocate their budget proportionately between housing and nonhousing goods for an additional household member, leaving the budget share of housing expenditures unchanged. For homeowners, nevertheless, an extra member implies a reduction in housing expenditures as a share of total budget. Although age and gender compositions turn out to be significant in determining the budget share of housing expenditures for renters, they play no major role for homeowners. And although an increase in the number of working members for renters significantly reduces the share of budget spent on housing, it has no significant impact for their owner counterparts. Moreover, keeping total expenditures constant, the main income source of the head of the household does not make any difference in terms of resource allocation across housing and nonhousing goods for both renters and owners.