Federal policy and the mid-century transformation in U.S. housing markets

The sharpest increase in home ownership in the United States over the last century occurred between 1940 and 1960, driven in large part by a decrease in age at first ownership. At the same time, family formation at younger ages became much more common. The three chapters of this dissertation shed light on the driving forces behind these changes in housing markets and household formation.;In Chapter 1, I focus on the decreased age at first ownership between 1940 and 1960. I assess the contribution of several coincident large-scale government interventions in housing finance by studying veterans' home loan benefits provided under the postwar GI Bills. Applying a regression discontinuity design to two breaks in the probability of military service by date of birth, for cohorts coming of age at the end of World War II and the Korean War, I estimate the impact of veteran status on home ownership. I find significant, positive effects of veteran status on home ownership that diminish with age, consistent with the predicted effects of easier loan terms. Complementary analyses suggest veterans' non-housing benefits and military service itself are unlikely to explain the observed differences in home ownership.;In Chapter 2, I ask how military service in World War II and the Korean War, and associated veterans' benefits, affected veterans' pattern of family formation, using a regression discontinuity design analogous to that in Chapter 1. The results suggest that service in the Korean War delayed marriage and had an initially dampening effect on having children. However, by 1960, service in the Korean War appears to be associated with a greater likelihood of having had a child, but not with a greater likelihood of having married. I discuss possible mechanisms for the documented facts, and suggest that the housing benefits provided to veterans under the GI Bills may have allowed Korean War veterans to more than recover from the disruption of service by relaxing constraints on household formation.;Chapter 3 turns to the remarkable fact that the U.S. home ownership rate increased by 10 percentage points between 1940 and 1945, despite the relative paucity of housing construction during World War II. I discuss possible reasons for this increase, and find evidence suggesting that wartime rent control may have contributed to this rise by stimulating the withdrawal of structures from the rental market for sale to owner-occupiers at uncontrolled prices.