Home-Ownership and Pensions: Negative Correlation, but No Trade-off

Abstract

This paper qualifies the role of home-ownership as an income complement for the elderly by taking the institutional context into account. We argue that a strategy of asset-based welfare focused on the promotion of home-ownership is not universally applicable, but depends on how housing and pension provision are organised. Based on the extent of commodification in housing and pensions, we distinguish four types of institutional contexts. We argue that, since relying on housing wealth as a pension essentially boils down to a market-based approach to welfare provision, this strategy is more likely to occur when both housing and pensions are largely commodified, which is only the case in the liberal welfare states. The conclusion of a trade-off between the rate of home-ownership and spending on pensions often referred to in prior work is unlikely to hold universally when differences between housing and pension provision across contexts are taken into account.