Does housing price destroy marital stability? Evidence from South Korea

ABSTRACT

This study examines the impact of housing price on the divorce rate in South Korea using a fixed effects model and dynamic panel data. There is currently a lack of consensus in the literature regarding the effect of house price on divorce. We simultaneously consider both house price and rental cost to distinguish a positive and negative effect of housing price. Using a cross-regional dataset of 15 provinces in South Korea from 1990 to 2013, we show that the wealth effect of house price changes on divorce rates is different from the effect of rental cost. All regression results indicate positive and statistically significant wealth effects of house price, but negative effects of the rental price changes on divorce rates.

KEYWORDS:

• Marital stability
• Housing price
• Wealth effect
• Dwelling effect

JEL CLASSIFICATION:

• D19
• J12
• R21
• R31

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ The sales price index represents house price, which is the traded right to property, whereas the Jeonse price means money deposit, which is the traded right to live for the duration of the contract without incurring monthly costs.

² $lnh{p}_t-lnh{p}_{t-1}=ln(h{p}_t/h{p}_{t-1})=ln(1+\mathrm{\Delta }hp/h{p}_{t-1})\simeq \mathrm{\Delta }hp/h{p}_{t-1}=\mathrm{\%}h{p}_{t-1}$.

³ Province(${\zeta }_i$) and year dummies(${\mu }_t$) are included in all specification.