Borrowing constraints, own labour and homeownership: Does it pay to paint your walls?

Arbeitspapier

Using a dedicated set of questions in the 2014 Luxembourg Household Finance and Consumption Survey (LU-HFCS), we show that a substantial share of households contributes their own labour to the acquisition of their main residence. These contributions help households faced with credit constraints, since they reduce the need for external financing. We develop a simple theoretical model and show that own labour contributions decrease with the level of financial resources available, while they increase with the mortgage interest rate. These theoretical results are supported by empirical analysis, which also shows that own labour contributions vary by household characteristics (age, gender, profession) and by type of dwelling (house, apartment).

Object Details

• ISBN: 978-92-899-4391-8
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2474

Classification and Topics

• Classification: Wirtschaft ; Household Saving; Personal Finance ; Interest Rates: Determination, Term Structure, and Effects ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
• Subject: Borrowing constraints ; down payment ; own labour ; sweat equity ; homeownership ; household ; survey

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lindner, Peter ; Mathä, Thomas ; Pulina, Giuseppe ; Ziegelmeyer, Michael
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2020

Further information

• DOI: doi:10.2866/22463
• Handle: http://hdl.handle.net/10419/229088
• Last update: 10.03.2025, 11:43 AM CET