Extending Continuous Time Microsimulation by Rules of Intergenerational Transmission: An Illustrative Application to Homeownership

Felix von Heusinger , DIW, HU Berlin
Sabine Zinn, DIW Berlin, HU Berlin

Social mobility is largely influenced by intergenerational transfers, often from parents to children. This includes but is not limited to the transfer of wealth. Access to housing is one such transfer that can shape the life of an individual significantly. However, rising hurdles toward homeownership make the attainment of a home increasingly difficult for younger generations in Europe (Bedük 2024). The parental history of homeownership may play an increasing role for the chances of children. We focus on these intergenerational transfers by introducing a novel expansion to continuous time microsimulation. Dynamic microsimulation gives us the ability to specify concrete scenarios we can use to highlight the micro level changes influencing pathways to homeownership. We expand microsimulation by adding the ability to let attributes from one generation affect the next, simulating intergenerational transmission. In this way, the attributes of previous generations can influence transition rates of the current. Through already established matching of individuals we create partnerships and thus families and genealogies. Our expanded microsimulation we then apply to study changes in homeownership in Europe. Focusing on families housing history, we examine the effect parental homeownership has on children’s chances, considering housing market developments and demographic change. In this way we expand microsimulation to show more complex relations between individuals and inheritance, opening new opportunities for study. Our expanded microsimulation toolkit is kept accessible and easy to use for all researchers.

See extended abstract

 Presented in Session P8. Demographic Trends, History, Data and Methods