Analysis of the intermediate housing market mechanism in the UK

Government policies have backed intermediate housing market mechanisms like shared equity, intermediate rented and shared ownership (SO) as potential routes for some households, who are otherwise squeezed between the social housing and the private market. The rhetoric deployed around such housing has regularly contained claims about its social progressiveness and role in facilitating socio-economic mobility, centring on a claim that SO schemes can encourage people to move from rented accommodation through a shared equity phase and into full owner-occupation. SO has been justified on the grounds of it being transitional state, rather than a permanent tenure. However SO buyers may be laden with economic cost-benefit structures that do not stack up evenly and as a consequence there may be little realistic prospect of ever reaching a preferred outcome. Such behaviours have received little empirical attention as yet despite, the SO model arguably offers a sub-optimal solution towards homeownership, or in terms of wider quality of life. Given the paucity of rigorous empirical work on this issue, this paper delineates the evidence so far and sets out a research agenda. Our analysis is based on a large dataset of new shared owners, observing an information base that spans the past decade. We then set out an agenda to further examine the behaviours of the SO occupants and to examine the implications for future public policy based on existing literature and our outline findings. This paper is particularly opportune at a time of economic uncertainty and an overriding ‘austerity’ drive in public funding in the UK, through which SO schemes have enjoyed support uninterruptedly thus far.

Inequality, intergenerational mobility and redistributive policies under endogenous information

This paper presents a dynamic model to study how different levels of information about the root determinants of wealth (luck versus effort) can impact inequality and intergenerational mobility through societal beliefs, individual choices and redistributive policies. To my knowledge, the model presented is the first dynamicmodel in which skills are stochastic and both beliefs and voted redistribution are determined endogenously. The model is able to explain a number of empirical facts. Large empirical evidence shows that the difference in the political support for redistribution appears to reflect differences in the social perceptions regarding the determinants of individual wealth and the underlying sources of income inequality. Moreover the beliefs about the determinants of wealth impact individual choices of effort and therefore the beliefs about the determinants of wealth impact inequality and mobility both through choices of effort and redistributive policies. The model generates multiple equilibria (US versus Europe-type) which may account for the observed features not only in terms of societal beliefs and redistribution but also in terms of perceived versus real mobility and inequality.