To the best of our knowledge, this work is the first to explore whether housing and pensions are com- plements or substitutes for each other, and the associated implications for the gender gap in wealth. [...] Finally, housing 5Matching is done under the assumption that since the UniSuper data contains the records of all the employees in the sector, every individual in HILDA is also in the UniSuper data. [...] Finally, the SMM estimator minimizes the distance between the empirical moments and the average of the N sets of simulated moments.21 5.1 Identification To explain how we identify the parameters of interest, we start with the intuition behind why each param- eter might significantly affect only a subset of moments. [...] Thus, bequest weight θ will apply to all (pension, financial and housing) wealth, and so we additionally identify this parameter via the age-profile of mean pension and housing wealth, and use the quartiles of overall wealth to further help fix the curvature of the function. [...] As for the intra-period substitution between the two, we estimate ρ to be -1.04 for males and -1.16 for females that implies an elasticity of substitution slightly above 0.45 – at the lower end of the range of estimates in the literature (Ogaki and Reinhart, 1998; Pakos, 2011; Albouy et al., 2016) but close to recent ones in McKay and Wieland (2022).
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Table of Contents
- Introduction 2
- Institutional context 5
- Data and empirical results 8
- Empirical estimates 11
- The model 15
- Calibrations and estimation approach 24
- Identification 26
- Structural results 28
- Structural estimates 28
- Data patterns and model fit 31
- How do pension and housing investments interact? 35
- The pensions – housing complementarity 37
- The housing – pensions substitutability 39
- Explaining the asymmetry in pension and housing investments 41
- Implications for gender inequality in wealth accumulation 43
- Structural robustness checks 44
- Conclusions 45
- Retirement plan features 50
- HILDA spending imputation estimates 51
- Computation 53
- Constructing the computational grids 53
- Solution method 54
- Sequential problem setup 54
- Constrains, transitions and payoffs 54
- Euler equations 56
- Inverting the Euler equation 57
- Estimation on HPC cluster 58
