Incentives and social capital: Are homeowners better citizens?

Homeownership may encourage investment in local amenities and social capita l, because homeownership gives individuals an incentive to improve their co mmunity and because homeownership creates barriers to mobility. Using the U .S. General Social Survey, we document that homeowners invest more in socia l capital; a simple instrumental variables strategy suggests that the relat ionship may be causal. We also find evidence that a large portion of the ef fect of homeownership on these investments comes from lower mobility rates for homeowners. Using the German Socio-Economic Panel, we find a connection between homeownership and citizenship controlling for individual fixed eff ects. (C) 1999 Academic Press.