Frank P. Stafford

Home Is Where the Equity Is: Mortgage Refinancing and Household Consumption

Applying a permanent income model with exogenous liquidity constraints and mortgage behavior, household refinancing when mortgage interest rates are historically high and rising, a persistent empirical puzzle, is explained. Using data from the Panel Study of Income Dynamics, households experiencing an unemployment shock and having limited initial liquid assets to draw upon are shown to have been 25% more likely to refinance, 1991-94. On average, such liquidity-constrained households converted over two-thirds of every dollar of equity they removed into current consumption as mortgage rates plummeted, 1991-94, producing an estimated expenditure stimulus of at least

Event History Calendars and Question List Surveys: A Direct Comparison of Interviewing Methods

28 billion.

Child Care Subsidies and Labor Supply in Sweden

The research reported in this article provides the first direct experimental comparison between Event History Calendar (EHC; N=309; 84.4 percent response rate) and standardized state-of-the-art question list (Q-list; N=307; 84.1 percent response rate) interviewing methodologies. Respondents and 20 interviewers were randomly assigned to EHC and Q-list interviews that were conducted via telephone in the spring of 1998. All interviews asked for retrospective reports on social and economic behaviors that occurred during the calendar years of 1996 and 1997. Using data from the same respondents collected 1 year earlier on events reported during 1996 as a standard of comparison, the quality of retrospective reports on 1996 events from the 1998 administration of EHC and Q-list interviews was assessed. In comparison to the Q-list, the EHC condition led to better-quality retrospective reports on moves, income, weeks unemployed, and weeks missing work resulting from self illness, the illness of another, or missing work for these reasons in combination with other ones. For reports of household members entering the residence, and number of jobs, the EHC led to significantly more overreporting than the Q-list. Contingent on additional research that examines a wider range of reference periods and different modes of interviewing, the EHC may become a viable and potentially superior method to the Q-list in the collection of self-reported retrospective information.

Parental Care of Children: Time Diary Estimates of Quantity, Predictability, and Variety.

This paper utilizes data from a Swedish household survey for 1984 (the HUS data) in combination with data on public child care fees and spaces per child by community. We argue that the subsidy rate and availability of spaces determined by the political leaders of the community is to a large extent exogenous to the household. The joint out-of-home child care and labor supply decision is analyzed by logit and ordered probit choice models. We find that the high quality public child care in Sweden encourages labor market activity of women with preschoolers even when the spouses income is high, and that when spaces are not rationed, a lower price encourages use.

The measurement and structure of household wealth

Time inputs to children are measured using data from the recent Time Use Survey conducted by the University of Michigan. We analyze time parents devote to their children, particularly in their preschool years, in an attempt to find out if there are social-class and education-of-wife differentials in this particular time use that may provide some insight into the intergenerational transmission of income inequality. We also offer some comment on labor supply of women and child care by men. We find that more-educated women spend more time playing with children, helping with the teaching of children, and in child-related travel.

Allocation of Time to Preschool Children and Educational Opportunity

This paper deals with methodological issues that arise in measuring household wealth. Two prominent American household surveys--the PSID and SCF--rely on different methodological approaches to the measurement of household wealth. In particular, SCF oversamples high-income households and has a far more extensive set of questions. In the top one percent of the wealth distribution, better measures of wealth are related to over- sampling of very wealthy households and the number of questions that are asked. However, one can characterize total household wealth holdings for the overwhelming majority of households with a relatively moderate number of questions. When successive waves of wealth modules are used to compute savings, the verdict on quality is more cautious, in part due to the inherently lartger role measurement error plays in any first difference formulation.

The Wealth Dynamics of American Families, 1984-94

Using a unique data source on family time use both in and outside the home, we obtained estimates of parental time allocated to preschool children for several socioeconomic status groups. We find that while high status mothers have a relatively high potential wage, they spend from two to three times as much time in preschool child care as do low status mothers. To the extent that this class differential in time investments to preschool children influences cognitive achievement, our results indicate again that equal educational programs across different school systems need not imply equal educational opportunity.

Social Returns to Quantity and Quality of Schooling

DURING THE 1990s, the United States has experienced substantial economic growth in both family income and wealth. The rise in wealth has occurred despite the well-documented decline in traditional saving and investment since the mid1980s. However, because of the lack of panel data on the composition of individual wealth holdings, it has not so far been possible to analyze properly the changing patterns in household wealth accumulation or the distribution of these changes across the population. This paper introduces features of the comprehensive measures of wealth, saving, and income in the Michigan Panel Study of Income Dynamics (PSID), in particular, the supplements on household family wealth funded by the National Institute on Aging. These datacurrently available for 1984, 1989, and 1994-permit an improved understanding of a number of issues, such as generational differences in long-term saving and wealth accumulation, differences in the accumulation of wealth between African American and other households, regional differences in accumulation, and the importance for wealth

The Decline in Household Saving and the Wealth Effect

The authors find high but diminishing marginal returns to investment in expenditures per pupil per year. The study suggests the desirability of increased educational quality in school districts with lower per pupil expenditures so as to equalize the returns to years and annual expenditure per student. (Necessarily, there should be optimization in the way inputs are combined as the school systems move to new output levels-consolidation being a pertinent example.) Since expenditure per student also affects years of schooling attained, a policy of improving the relative quality of school systems in poverty areas may partially offset inherited economic disadvantages.

An Assessment of Alternative Measures of Time Use

Using a unique set of household level panel data, we estimate the effect of capital gains on saving by asset type, controlling for observable and unobservable household specific fixed effects. The results suggest that the decline in the personal saving rate since 1984 is largely due to the significant capital gains in corporate equities experienced over this period. Over five-year periods, the effect of capital gains in corporate equities on saving is substantially larger than the effect of capital gains in housing or other assets. Failure to differentiate wealth affects across asset types results in a significant understatement or overstatement of the size of their impact, depending on the asset.